Tata Motors upgraded to 'Buy' despite target price cut; Should you buy now?
Tata Motors gets an HSBC upgrade to 'Buy' despite a lower target price. JLR valuation, cost cuts, and new launches could drive a re-rating.
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11:13 AM IST
HSBC upgraded Tata Motors' rating to "Buy" from "Hold" on Monday. However, the business reduced its price forecast downward to Rs 840 from Rs 930, representing a 29 per cent increase from current levels. The upgrading follows a steep reversal in Tata Motors' stock price, which has fallen 45 per cent since its peak of Rs 1,179 on July 30, 2024. As of today, shares are trading at Rs 661.35, up 0.89 per cent (Rs 5.85). The stock has shown indications of recovery following a 12 per cent drop in 2025, seeking to recover from its 52-week low.
JLR value and domestic recovery improve sentiment
One of the key reasons for HSBC's upgrade is the increased value of Jaguar Land Rover (JLR). The luxury car segment is currently selling at 1.8 times its FY26 Enterprise Value-to-EBITDA (EV/EBITDA), which is around the bottom of its historical range. The firm also expects Tata Motors' domestic commercial vehicle industry to rebound, notably in Small Commercial Vehicles (SCV), which will help margin expansion.
Margin improvement and cost reduction are critical to resurrection
According to HSBC, Tata Motors' profit margins are likely to improve. A reduction in JLR's discounts and warranty costs, together with growing demand in the domestic Passenger Vehicles (PV) market, is expected to contribute to improved profitability. New PV launches are expected to increase market share and investor confidence.
The key re-rating driver is JLR guidance and domestic market growth
A major re-rating trigger for Tata Motors would be JLR meeting its March quarter guidance. HSBC says that if JLR meets expectations, it will signify stability and development for the company. Furthermore, Tata Motors' forthcoming domestic vehicle releases could help it increase market share.
Fundraising strategies prioritized ahead of board meeting
Tata Motors has scheduled a board meeting for March 19 to discuss raising Rs 2,000 crore through Non-Convertible Debentures. The move is expected to improve its financial situation and facilitate commercial expansion.
Analyst consensus signals bullish outlook
Among 34 analysts covering Tata Motors, 21 have a "Buy" rating, eight suggest "Hold," and five recommend "Sell." The consensus estimate indicates a potential upside of 25 per cent from current levels.
Tata Motors stock outlook: Signs of recovery ahead
With HSBC’s upgrade, JLR’s improving valuation, and positive domestic market developments, Tata Motors seems poised for a turnaround. Investors will closely watch upcoming earnings and the March 19 board meeting for further cues.
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