Tata Motors hits record high after Nomura upgrade

Tata Motors’ stock soared to an all-time high of Rs 1,084.90 per share during Thursday’s trading session on the NSE, marking a 5.65 per cent increase. This surge followed a significant upgrade from Japanese brokerage firm Nomura, which has raised Tata Motors Ltd.’s rating from ‘Neutral’ to ‘Buy’ and set a new highest-ever price target of Rs 1,294 per share.

Nomura’s Upgrade and Target Revision

Nomura's upgrade reflects heightened confidence in Tata Motors’ future performance, driven by anticipated gains from Jaguar Land Rover’s (JLR) enhanced operational execution. The revised price target represents a potential upside of 26 per cent from the stock’s closing levels on Wednesday.

Reasons Behind the Upgrade

The brokerage cites Tata Motors’ planned demerger of its passenger vehicle (PV) and commercial vehicle (CV) businesses as a key factor in the upgrade. This strategic move is expected to unlock substantial value for the CV segment. Furthermore, Nomura has adjusted its valuation multiple for JLR to 3.5 times its Enterprise Value-to-EBITDA (EV/EBITDA), up from 2.75 times, reflecting positive growth prospects.

JLR’s Business Outlook

Nomura anticipates a significant improvement in JLR’s EBIT margins, forecasting an increase from 7.8 per cent in FY25 to 10.1 per cent by FY27, with further potential growth to 11-12 per cent by FY30. This expected growth is attributed to the reduction in Jaguar internal combustion engine (ICE) models, the success of new Jaguar electric vehicles (EVs) on the JEA platform, and the introduction of more premium Range Rover variants.

Current Valuation and Financial Projections

At present, Tata Motors is trading at 5.4 times FY26 Enterprise Value-to-EBITDA. The company, which had a net debt of Rs 16,000 crore (approximately Rs 44 per share) in FY24, is projected to shift to a net cash position of Rs 57 per share by FY26 and Rs 140 per share by FY27.