HSBC has upgraded Tata Motors to ‘Buy’ while cutting the target price to ₹840 from ₹930, implying a 28% upside potential from the current market price of ₹654.70. The brokerage believes that margin expansion in JLR and a recovery in the domestic small commercial vehicle (SCV) segment will be key growth catalysts.
A reduction in discounts and warranty costs at Jaguar Land Rover (JLR), along with an improving SCV business in India, are expected to drive profitability. HSBC sees JLR achieving its Q4FY24 guidance as a potential re-rating trigger, while new launches in the domestic passenger vehicle (PV) segment should support market share gains.
Tata Motors’ valuation has de-rated over the last two to three quarters, making it look more reasonable at current levels. The brokerage notes that JLR is now trading at 1.8x FY26 estimated EV/EBITDA, which is at the lower end of its historical valuation range. Given these factors, HSBC sees strong upside potential for the stock.
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