Tata Motors Shares Rise 6% To Fresh 52-Week High On Nomura Upgrade; Check Target Price

Shares of Tata Motors, a leading global automobile manufacturer, surged 6 per cent to hit a fresh all-time high of Rs 1,084.90 per share in today’s trade following an upgrade from Japanese brokerage firm Nomura.

The brokerage revised its rating for Tata Motors to ‘Buy’ from the earlier recommendation of ‘Neutral’. It also revised its price target by 26 per cent upward to Rs 1,294 from Rs 1,141 earlier.

Nomura believes Jaguar Land Rover’s (JLR) execution can lead to significant upsides for the Tata Motors stock.

Tata Motors’ proposed demerger plan to hive off its passenger vehicle (PV) and commercial vehicle (CV) business may unlock value for the company’s CVs business.

The multibagger scrip has climbed 67 per cent in a year and risen 137 per cent in two years. Tata Motors stock hit a 52-week low of Rs 593.50 on August 25, 2023.

On BSE, around 4.87 lakh shares changed hands amounting to a turnover of Rs 51.37 crore today. Market cap of the firm rose to Rs 3.55 lakh crore.

Nomura hiked the target multiple for JLR to 3.5 times its Enterprise Value-to-EBITDA from 2.75 times given potential upsides.

EBIT margins for Tata Motors are likely to rise 8.5 per cent in financial year 2025 from 7.8 per cent earlier to 10.1 per cent by financial year 2027 with further potential to rise to 11- 12 per cent by financial year 2030, the brokerage said.

The Tata Group firm will announce its Q1 earnings on August 1.

In the March 2024 quarter, the firm logged a net profit of Rs 17,407 crore aided by a tax credit of Rs 8,159 crore. Tata Motors reported a net profit of Rs 5,400 crore in Q4FY23.

Revenue for the January-March quarter of the financial year 2023–24 rose 14% to Rs 1.20 lakh crore rising more than 14 per cent from Rs 1.05 lakh crore in Q3FY23.

EBITDA or earnings before interest, taxes, depreciation, and amortisation climbed 33 per cent year-on-year to Rs 17,035 crore from Rs 12,810 crore in Q3FY23.

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