Tata Motors Stock: A Strong Buy for 35% Upside – Should You Invest Now?
Tata Motors, one of India’s leading automobile companies, has been making waves in the stock market with its steady growth and strategic expansions. Despite near-term challenges, global brokerage firm CLSA has given a strong ‘buy’ recommendation on the stock, setting a target price of ₹930 per share, implying an impressive 35% upside potential from its current levels.
With India’s passenger car market projected to grow from $42.72 billion in 2024 to $53.04 billion by 2029, Tata Motors stands at the forefront of this industry shift. The company’s aggressive push into electric vehicles (EVs), strong SUV sales, and a solid foothold in the commercial vehicle sector make it an attractive investment. But should you add Tata Motors to your portfolio right now? Let’s dive deeper.
Tata Motors’ Stock Performance and Price Movement
Tata Motors Ltd, with a market capitalization of ₹2.52 lakh crore, has been experiencing notable price movements. The stock closed at ₹687.40 per share, marking a 0.85% increase from its previous closing price of ₹681.60. While the stock has witnessed some fluctuations, analysts believe this presents a lucrative entry point for long-term investors.
Brokerage Call: Why CLSA is Bullish on Tata Motors
CLSA’s optimism about Tata Motors stems from several factors:
- Undervalued Jaguar Land Rover (JLR) Business: JLR is currently trading at 1.2x FY27 EV/EBITDA, significantly below its historical multiple of 2.5x.
- SOTP Valuation Model: At the current stock price, JLR’s implied value is approximately ₹320 per share, but CLSA estimates its fair value to be around ₹450 per share.
- Resilience Amid Challenges: The stock remains resilient against potential risks such as US tariff hikes and weaker margins.
- Upcoming Cyclical Recovery: CLSA expects a rebound in the medium and heavy commercial vehicle segment from FY27, which could boost valuations.
Financial Performance and Q3 FY25 Results
Despite a 22% YoY drop in consolidated net profit to ₹5,451 crore in Q3 FY25, Tata Motors reported sequential improvement in several key metrics. The revenue for the quarter increased 2.7% YoY to ₹1,13,575 crore, driven by modest sales growth.
Other key takeaways from Tata Motors’ performance include:
- Commercial Vehicle (CV) Segment: Revenue declined by 8.4% YoY to ₹18,400 crore, but margins improved due to cost-cutting and PLI incentives.
- Electric Vehicle (EV) Segment: Personal EV sales grew 19% YoY, but overall fleet sales dropped after the expiration of FAME II subsidies.
- SUV and Passenger Vehicles: Tata Motors continues to dominate the SUV market with record-high sales.
Recent Developments and Future Outlook
Tata Motors is actively launching new EV models, including the all-new Sierra and Harrier EV showcased at the Auto Expo. Other major developments include:
- Expansion of its Fleet Edge platform, now boasting over 760,000+ active vehicles.
- Advancements in E-Dukaan and Fleet Verse, contributing to strong digital sales.
- Sustainable initiatives, including Zero Waste certification and decarbonization efforts.
Management remains optimistic about future growth, citing rising domestic demand, infrastructure investments, and new product launches as key drivers. Moreover, JLR is set to witness improved wholesales in Q4, signaling a potential recovery.
Financial Ratios & Valuation Metrics
To understand Tata Motors’ fundamental strength, let’s take a look at key financial metrics:
| Metric | Value |
|---|---|
| Market Cap | ₹2,50,689 Cr. |
| Current Price | ₹681 |
| 52-Week High/Low | ₹1,179 / ₹667 |
| Stock P/E | 7.87 |
| Book Value | ₹275 |
| Dividend Yield | 0.44% |
| ROCE | 20.1% |
| ROE | 49.4% |
| Face Value | ₹2.00 |
| Promoter Holding | 42.6% |
| Debt to Equity | 1.05 |
| Price to Earnings | 7.87 |
| Pledged Percentage | 0.00% |
| QoQ Profit Growth | 61.7% |
| Quarterly Profit Variation | -23.0% |
| Industry PE | 17.4 |
| Graham Number | ₹758 |
| Intrinsic Value | ₹663 |
| RSI | 38.6 |
| EPS | ₹93.0 |
| No. of Shares | 368 |
| PEG Ratio | 0.08 |
| DMA 200 | ₹835 |
| Free Cash Flow (3 Yrs) | ₹52,520 Cr. |
| Free Cash Flow (Latest) | ₹36,733 Cr. |
Should You Invest in Tata Motors?
Tata Motors presents a compelling investment opportunity, backed by: ✅ Strong SUV sales and market dominance
✅ Growing presence in EVs and commercial vehicles
✅ Resilient JLR business with significant upside potential
✅ Valuation re-rating expected with industry recovery
Risks to Consider
❌ Short-term margin pressures due to fluctuating input costs
❌ Global market uncertainties impacting JLR’s performance
❌ High debt-to-equity ratio, although manageable
Final Verdict: A Strong Buy for Long-Term Investors
With CLSA’s ₹930 price target, Tata Motors offers a potential 35% upside. The stock is currently trading at attractive valuations, making it a lucrative buy for long-term investors.
As India’s passenger vehicle market expands, and with Tata Motors leading in SUVs, EVs, and commercial vehicles, the company remains well-positioned for future growth.
💡 Do you own Tata Motors stock? If not, is it time to add it to your portfolio? Let us know in the comments!
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.