Tata Group Stock Alert: HSBC turns bullish — this auto stock could rally 17%. Are you holding it?

Tata Group Shares: Tata Motors Commercial Vehicles (TMLCV) drew broker confidence on Tuesday after HSBC initiated coverage with a ‘Buy’ rating, citing improving industry dynamics, stable demand and stronger pricing discipline. The brokerage has set a target price of Rs 380, implying meaningful upside from the stock’s current level.

At around Rs 325 apiece, TMLCV shares are trading slightly below their listing-day price of Rs 330 on November 12.

Brokerage views on TMCLV

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HSBC said the demand backdrop for the commercial vehicle (CV) industry remains steady, helping maintain profitability across the cycle. The firm highlighted Tata Motors’ disciplined discounting strategy and the company’s pricing power, particularly in the medium and heavy commercial vehicle (MHCV) segment, as key drivers of earnings visibility.

The brokerage also noted that the CV industry’s growth, margin profile and return on capital employed (ROCE) now mirror those of the passenger vehicle industry—a shift that strengthens the re-rated view of the sector. Tata Motors’ ability to command premium pricing in MHCVs reinforces this thesis, HSBC said.

Demerger boosts transparency and potential re-rating

Following Tata Motors’ recent demerger, TMLCV now operates as an independent entity. HSBC believes this structural change improves operational clarity, helps investors better assess the business’s intrinsic value, and could offer incremental support to valuations going forward.

The brokerage added that CV companies continue to trade at a discount to passenger vehicle firms. If industry fundamentals remain firm, the valuation gap could narrow, offering additional re-rating potential.

HSBC raises target on Ashok Leyland; rating unchanged

Alongside its view on Tata Motors’ CV business, HSBC maintained its ‘Hold’ rating on Ashok Leyland, but lifted the target price from Rs 145 to Rs 160. Based on the current market price of Rs 148, the revised target suggests an upside of around 8 per cent.

HSBC said Ashok Leyland’s performance remains steady, but valuations appear fairly priced, which is why the brokerage did not upgrade its recommendation.