Tata Motors Ltd’s shares surged to an all-time high today, buoyed by a positive upgrade from international brokerage Nomura. The brokerage raised its rating for Tata Motors from ‘Neutral’ to ‘Buy’ and increased its price target by 26per cent, revising it from Rs 1,141 to Rs 1,294.
Nomura’s bullish outlook is largely driven by anticipated benefits from Jaguar Land Rover’s (JLR) performance, which could positively impact Tata Motors’ stock. Additionally, the brokerage sees significant value in Tata Motors’ strategy to separate its passenger vehicle (PV) and commercial vehicle (CV) businesses.
In early trading today, Tata Motors’ stock jumped more than 4per cent to a record high of Rs 1,071, compared to the previous closing price of Rs 1,027.65 on the Bombay Stock Exchange (BSE).
Over the past year, Tata Motors’ shares have soared by 67per cent, and they have increased by 137per cent over the past two years. The stock had touched a 52-week low of Rs 593.50 on August 25, 2023.
Trading volume was robust, with approximately 4.87 lakh shares exchanged, leading to a turnover of Rs 51.37 crore. The company’s market capitalisation now stands at Rs 3.55 lakh crore.
Nomura has revised its valuation multiple for JLR, increasing it to 3.5 times its Enterprise Value-to-EBITDA from the previous multiple of 2.75 times, anticipating improved future performance.
The brokerage expects Tata Motors’ EBIT margins to rise to 8.5per cent for the financial year 2025, up from 7.8per cent previously. By the financial year 2027, margins are projected to reach 10.1per cent, with potential growth to 11-12per cent by 2030.
Tata Motors is scheduled to announce its Q1 earnings on August 1. For the quarter ending March 2024, the company reported a net profit of Rs 17,407 crore, bolstered by a tax credit of Rs 8,159 crore, compared to a net profit of Rs 5,400 crore in Q4FY23.
Revenue for the January-March 2024 quarter increased by 14per cent to Rs 1.20 lakh crore, up from Rs 1.05 lakh crore in Q3FY23. EBITDA also saw a substantial rise, climbing 33per cent year-on-year to Rs 17,035 crore from Rs 12,810 crore in Q3FY23.
