Tata Motors' Shares Upbeat After Nomura Upgrades Stock To 'Buy'

Tata Motors‘ share price was upbeat on Thursday morning, going up over 1% after the company got a ratings upgrade from a major brokerage firm

What Happened: Nomura upgraded the automobile maker to “buy” from “neutral”, raising the target price to ₹1,294 from ₹1,141. The firm believes that Jaguar Land Rover’s (JLR) execution can lead to significant upside for the company.

Tata Motors’ commercial vehicle (CV) business demerger could unlock additional value, the brokerage said. Moreover, the transition of JLR from a premium to a luxury brand is expected to help it stay ahead in competitive segments.

The analysts also note that incentives for Land Rover have been well controlled, even as other original equipment manufacturers face an uptrend in incentives.

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The brokerage firm projects JLR’s EBIT margin to rise to 10.1% by FY27. There is potential for the EBIT margin to reach 11-12% by FY30, driven by the phase-out of Jaguar ICE vehicles and the success of new Jaguar electric vehicles, the brokerage added.

The company’s net automotive debt of ₹16,000 crore in FY24 is expected to shift to a net cash position by FY26-27. The brokerage said that the key downside risks include a sharp drop in demand in China and the European Union, as well as rising incentives.

Price Action: Tata Motors’ share price was up 1.08% to trade at ₹1,038.75 as the markets opened on Thursday.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.