Tata Motors Stock Target Price: The decline in the stock of Tata Group’s leading auto company Tata Motors has been halted today. Today the stock strengthened to Rs 979. Brokerage house MK Global Financial Services has improved its rating on Tata Motors stock from ‘Add’ to ‘Buy’. The brokerage believes that after a recent decline of 18 percent from the high level, the valuation of Tata Motors stock is the lowest among the original equipment manufacturers (OEMs). The stock had declined in the past days due to high discounts in view of weak demand from China and sluggish demand for domestic commercial and passenger vehicles.
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Margins likely to see strong growth
Brokerage house Emkay Global Financial Services has recommended investing in Tata Motors stock and has given a target price of Rs 1175, which is 22 per cent higher than the current price. Emkay Global said that China is a relatively small market for Jaguar Land Rover (JLR), which is around 24 per cent compared to BMW’s 32 per cent. Profitability and debt outlook remain largely intact. India CV outlook is improving, healthy fleet operator profitability, sustained pricing discipline are likely to see strong growth in margins. Tata Motors’ balance sheet is now healthy, while valuation is better.
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Some impact of weak outlook for domestic PV industry
Emkay Global said the underlying metrics for the domestic PV industry are deteriorating amid sluggish retail sales, rising inventory and widening discounts. Its channel checks indicate further weakness in the outlook post the upcoming festive season. While TTMT will also be impacted by this slowdown, we believe the curve in new launches (according to checks, it accounts for 10 per cent of dealer volumes in some markets) and relatively low inventory will help it perform better than the industry.
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Sell rating also in stock
In its latest report on Tata Motors, brokerage house UBS had warned about the stock. The brokerage believes that this auto stock may come under pressure in the next few months. The stock can fall from its current price to Rs 825. UBS has given a Sell rating on the stock of Tata Motors. The brokerage has valued JLR at Rs 340. While the value of Indian CV / PV segment is kept at Rs 280 and Rs 170 at 10x/14x one-year EV / EBITDA. While the value of investment in subsidiary companies / associates is kept at Rs 35. The brokerage says that due to high valuation, there is a risk of further decline in the stock due to reduction in margins within JLR and Indian PV (especially the EV arm) on any significant shortfall in performance.
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JLR’s order backlog below pre-Covid
According to brokerage house UBS, JLR’s order backlog is already below pre-Covid and incremental booking supply is lacking. Incentives for Range Rover-JLR’s top models may soon start increasing from zero levels. Rising discounts, moderate growth and lack of any new ICE/hybrid launches could lead to a very weak financial position for FY26, even if the consensus sets aside the last 2 years’ results. The softening in JLR volumes comes at a time when CV demand in India is faltering, while passenger vehicles (PVs) have started underperforming their regional peers in terms of growth and margins.
(Disclaimer: The views or advice on the stock are given by the brokerage house. These are not the personal views of Financial Express. There are risks in the market, so take expert advice before investing.)