Tata Motors share price gained over 2% on Wednesday, rallying 7% in one week, as brokerages maintained a bullish stance on the stock amid improved growth prospects highlighted by the company at its investor meet.
While Tata Motors‘ India business has already become net debt free in FY24, it has set a target for Jaguar Land Rover (JLR) to become net debt free by FY25.
Tata Motors aims to grow 2x of underlying passenger vehicle (PV) industry on new nameplates in ICE, CNG, and EVs, with expansion in the addressable market to 80% by FY30 versus 53% now (EVs to form 30% of the portfolio by FY30). It targets profitability improvement, with double-digit margin in the combined PV and EV business by FY30. It also targets electric vehicle (EV) business to achieve EBITDA break-even by FY26.
The improved growth prospects in CVs prompt an upgrade in brokerage firm Emkay Global Financial Services’ target multiple to 12.5x. It has upgraded the ratings on Tata Motors shares to ‘Add’ from ‘Reduce’ earlier and raised the Tata Motor share price target to ₹1,050 apiece from ₹950 earlier.
According to JM Financial, the net-cash position in Tata Motors’ domestic business drives comfort. It maintained a ‘Buy’ rating on Tata Motors stock with an unchanged Mar 2025 target price of ₹1,200 per share.
Motilal Oswal Financial Services expects JLR margins to remain stable over FY24-26, given rising cost pressure as it invests in demand generation, normalizing mix, and EV rampup, which is likely to be margin-dilutive.
“Even in India business, both CV and PV businesses are seeing moderation in demand. We have factored in flat margins for India business over our forecast period. While there is no doubt that Tata Motors delivered an extremely robust performance across its key segments in FY24, the above-mentioned headwinds could hurt its performance going ahead,” Motilal Oswal said.
The brokerage firm reiterated its ‘Neutral’ call on Tata Motors shares with FY26E target price of ₹955 per share.
Kotak Institutional Equities maintained its FY2025-27E EPS estimates. Overall, it expects FY2025-27E performance to remain healthy, led by an improvement in JLR business performance, driven by steady demand trends; market share gains in PV and CV segments; and net cash balance sheet by FY2025E.
It maintained an ‘Add’ rating on the stock with an unchanged target price of ₹1,100 per share.
Nuvama Institutional Equities slightly raised FY25E EBITDA estimates by 2%, factoring in better realisation/margins, but kept FY26E EBITDA unchanged. It builds in a moderate revenue and EBITDA CAGR of 9% and 13% over FY24–26E versus 21% and 25% over FY21–24.
The brokerage house retained its ‘Reduce’ rating with Tata Motors share price target of ₹940 per share.
At 11:55 am, Tata Motors shares were trading 0.82% higher at ₹995.20 apiece on the BSE.
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Published: 12 Jun 2024, 11:57 AM IST