Tata Motors stock gains 6%, reaches new all-time high after Nomura upgrades rating to ’buy’

Shares of Tata Motors, a leading global automobile manufacturer, surged 6% to hit a fresh all-time high of ₹1,084.90 per share in today's trade following an upgrade from Japanese brokerage firm Nomura. 

Nomura has revised its rating on the stock to 'buy' from 'neutral' and increased its target price to ₹1,294, up from the previous target of ₹1,141. This new target reflects a potential upside of 26% from the stock's previous closing price.

The brokerage highlighted that Tata Motors’ strategy to transition Jaguar Land Rover (JLR) from premium to luxury segments is expected to keep the brand competitive amidst rising competition. It noted that JLR's incentives for Land Rover have remained well-controlled, unlike trends seen with other OEMs.

Although volume growth is projected to be modest, with Nomura estimating volumes of 402k, 405k, and 435k over FY25–27, earnings growth is anticipated to be robust due to increasing average selling prices (ASPs) and improved margins. 

Nomura forecasts that JLR’s ASP will rise from approximately GBP 72,000 in FY24 to GBP 77,000 by FY27. It projects EBIT to grow by 8.5% in FY25, reaching 10.1% by FY27, with the potential to further increase to around 11–12% by FY30.

It anticipates the growth is supported by the phase-out of Jaguar's ICE models, the success of new Jaguar EVs (JEA platform), and the introduction of more premium Range Rover variants. Despite a downturn in demand within the passenger vehicle (PV) and electric vehicle (EV) sectors, it estimates that new launches such as the Curvv (scheduled for August 7) and the Harrier EV in FY25 will drive overall volumes. 

For the medium and heavy commercial vehicle (MHCV) segment in India, Nomura projects a 5% volume CAGR from FY25 to FY27, with EBITDA margins expected to remain around 11.5% due to strong demand.

Nomura forecasts Tata Motors revenue for Q1 FY25 at ₹1.09 lakh crore, reflecting a 7% year-on-year increase. It expects EBITDA margin to be around 13.8%, a slight decrease of 40 basis points quarter-on-quarter due to seasonal factors.

For JLR, it projects revenue to reach GBP 7.3 billion, marking 6% year-on-year growth, with the EBITDA margin expected to marginally decrease to 16.1%, down 25 basis points quarter-on-quarter.

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