Shares of Tata Motors Ltd reached a record high today following an upgrade from international brokerage Nomura. The firm revised its rating for Tata Motors from ‘Neutral’ to ‘Buy’ and increased its price target by 26% to Rs 1,294 from Rs 1,141 previously.
Nomura’s positive outlook is based on the belief that Jaguar Land Rover’s (JLR) performance could significantly benefit Tata Motors’ stock. The brokerage also highlighted the potential value that could be unlocked by Tata Motors’ plan to demerge its passenger vehicle (PV) and commercial vehicle (CV) businesses.
The stock surged more than 4% to an all-time high of Rs 1,071 in early trading today, up from the previous close of Rs 1,027.65 on the Bombay Stock Exchange (BSE).
Over the past year, Tata Motors’ shares have climbed 67%, and over two years, they have risen by 137%. The stock had hit a 52-week low of Rs 593.50 on August 25, 2023.
Trading activity was robust, with around 4.87 lakh shares changing hands, resulting in a turnover of Rs 51.37 crore. The company’s market capitalisation increased to Rs 3.55 lakh crore.
Nomura has adjusted its valuation multiple for JLR, raising it to 3.5 times its Enterprise Value-to-EBITDA from the previous 2.75 times. This reflects anticipated gains in the company’s future performance.
The brokerage expects Tata Motors’ EBIT margins to improve to 8.5% for the financial year 2025, up from 7.8% earlier. By the financial year 2027, these margins are projected to reach 10.1%, with the potential to rise further to 11-12% by financial year 2030.
Tata Motors is set to announce its Q1 earnings on August 1. In the March 2024 quarter, the company reported a net profit of Rs 17,407 crore, benefiting from a tax credit of Rs 8,159 crore. This compares to a net profit of Rs 5,400 crore in Q4FY23.
Revenue for the January-March quarter of the financial year 2023–24 increased by 14% to Rs 1.20 lakh crore, up from Rs 1.05 lakh crore in Q3FY23.
Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) also saw a significant rise, climbing 33% year-on-year to Rs 17,035 crore from Rs 12,810 crore in Q3FY23.
Source Agencies
