Synopsis: Tata Motors' shares surged over 4% to an all-time high of Rs. 1071 in early trading today, following Nomura's upgrade of the stock to 'Buy' from 'Neutral' and an increased target price of Rs. 1,294, reflecting confidence in the company's potential growth and strategic plans, especially regarding Jaguar Land Rover (JLR) and the proposed demerger of its vehicle businesses.
Tata Motors' stock price soared over 4% today, reaching a historic high of Rs. 1071, compared to the previous close of Rs. 1027.65 on the BSE.
This impressive rise followed an optimistic upgrade from Nomura, which revised its rating on the stock to 'Buy' from 'Neutral' and raised its target price by 26% to Rs. 1,294 from Rs. 1,141.
Nomura's confidence stems from Tata Motors' strategic initiatives, including a proposed demerger to separate its passenger vehicle (PV) and commercial vehicle (CV) businesses.
The brokerage anticipates that this move will unlock significant value, particularly for the CV segment.
Additionally, Nomura believes that Jaguar Land Rover's execution could lead to substantial upsides for Tata Motors' stock.
Tata Motors' shares have seen a remarkable 67% increase over the past year and have more than doubled, rising 137% over the past two years.
The stock reached its 52-week low of Rs. 593.50 on August 25, 2023, but has since demonstrated strong performance.
The volume of trading was also noteworthy, with around 4.87 lakh shares exchanging hands, resulting in a turnover of Rs. 51.37 crore.
Consequently, the company's market capitalization rose to Rs. 3.55 lakh crore.
Nomura has also revised its target multiple for JLR to 3.5 times its Enterprise Value-to-EBITDA from 2.75 times, citing potential upsides.
The brokerage projects that Tata Motors' EBIT margins will increase from 7.8% in FY 2025 to 8.5%, potentially reaching 11-12% by FY 2030.
In the March 2024 quarter, Tata Motors reported a net profit of Rs. 17,407 crore, boosted by a tax credit of Rs. 8,159 crore.
The company's revenue for the January-March quarter of FY 2023-24 rose 14% to Rs. 1.20 lakh crore, while EBITDA climbed 33% year-on-year to Rs. 17,035 crore.
Tata Motors is set to announce its Q1 earnings on August 1.
In conclusion, Tata Motors' robust performance and strategic initiatives, particularly the proposed demerger and the improved outlook for Jaguar Land Rover, have garnered positive attention from international brokerage Nomura. This has translated into a significant rise in the company's stock price, reflecting investor confidence in Tata Motors' future growth prospects.
Disclaimer: We provide stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
