Tata Motors shares climbed nearly 4% on Thursday, hitting a new 52-week high of Rs 1,067 on the BSE. This increase followed Nomura’s upgrade of the stock to a “buy” rating, with a target price of Rs 1,294. Nomura highlighted Tata Motors’ strategic shift from premium to luxury vehicles as crucial for staying competitive in challenging market segments.
On Thursday, Tata Motors’ shares soared nearly 4% to a new 52-week high of Rs 1,067 on the BSE, following an upgrade by global brokerage firm Nomura. The firm raised its rating on the blue-chip Nifty stock from neutral to buy, with a target price of Rs 1,294.
Nomura, in its upgrade, emphasized that the shift from premium to luxury vehicles will enable JLR to maintain a competitive edge in highly contested market segments.
Tata Motors’ share price jumped 5.65% to a record high of Rs 1,084.90 per share on the NSE during Thursday’s trading session. This surge came after Japanese brokerage firm Nomura upgraded Tata Motors Ltd. from a ‘Neutral’ to a ‘Buy’ rating.
Nomura Upgrades Tata Motors To Buy
Nomura has revised its rating for Tata Motors Ltd. from ‘Neutral’ to ‘Buy’ and increased its price target to Rs 1,294 per share, up from Rs 1,141. This new target suggests a potential upside of 26% based on the stock’s closing price on Wednesday and is the highest target on the market.
Reasons for the Upgrade
View on JLR Business
The upgrade is mainly attributed to anticipated gains from improved performance by Jaguar Land Rover (JLR). Nomura also believes that Tata Motors’ proposed demerger plan to separate its passenger vehicle (PV) and commercial vehicle (CV) divisions could create value for the CV segment.
Nomura has increased the target multiple for Jaguar Land Rover (JLR) to 3.5 times its Enterprise Value-to-EBITDA, up from 2.75 times, indicating potential for growth. The brokerage anticipates EBIT margins to rise from 7.8% in FY25 to 10.1% by FY27, with further growth to 11-12% by FY30. This expected increase is supported by reducing Jaguar’s internal combustion engine (ICE) models, the success of new Jaguar electric vehicles (JEA platform), and additional premium Range Rover variants.
Current Valuation and Financial Outlook
Tata Motors is currently trading at 5.4 times FY26 Enterprise Value-to-EBITDA. The company, which had a net debt of Rs 16,000 crore (Rs 44 per share) in FY24, is projected to shift to a net cash position of Rs 57 per share by FY26 and Rs 140 per share by FY27.
Downside Risks
Nomura also pointed out potential downside risks, including a possible significant decline in demand in China and the EU, as well as increasing incentives.
Stock Performance Over the Past Year
Tata Motors shares have shown strong performance across various time frames. In the past month, the stock has delivered a notable return of 13.09%, reflecting its stability and growth potential. Over the last six months, it has seen an impressive 33% increase, demonstrating a strong upward trend. Year-to-date, Tata Motors shares have surged by 36.59%, reinforcing the stock’s positive momentum for the current fiscal year. Over the past twelve months, the stock has achieved a remarkable return of over 68.84%, highlighting its sustained growth and appeal to investors.
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