Tata Motors stock showed signs of recovery on September 19, following a three-day downward streak. This upward shift came after Emkay Global upgraded the stock from 'add' to 'buy' with a target price of ₹1,175 per share. The company's shares jumped over 1 per cent, trading at ₹977 on the NSE during early market hours. Investors interested in share market investment may see this as an opportunity, especially given the potential upside of around 22 per cent based on Emkay's projection.
This marks a turnaround in Tata Motors' recent performance, as the stock experienced a correction of nearly 13 per cent in the past month. Emkay Global's recommendation has breathed new life into share market investment for Tata Motors, with optimistic projections for both its domestic and international operations.
JLR and Tata Motors' domestic business outlook
Emkay Global remains positive about Tata Motors' profitability and deleveraging strategy, especially concerning its luxury arm, Jaguar Land Rover (JLR). While China remains a smaller market for JLR, the company's profitability continues to impress. On the domestic front, Tata Motors is benefiting from improved demand and a more favourable margin outlook in its commercial vehicle (CV) segment. This makes Tata Motors a compelling choice for those looking at share market investment, given the strong foundation of its business.
In addition, Tata Motors has outperformed the industry in the passenger vehicle (PV) market, with recent successful launches and lower inventory levels. The company's promising growth trajectory, combined with its current valuations, has reinforced Emkay's decision to upgrade its rating, further driving interest in share market investment.
UBS maintains a cautious stance on Tata Motors
On the other hand, UBS Securities has maintained its 'sell' rating for Tata Motors, setting a target price of ₹825. UBS cites concerns over potential margin slippage in both JLR and the domestic PV segment. With this outlook, the firm predicts a downside risk of over 20 per cent from Tata Motors' recent market performance, making share market investment in the stock less attractive to some. UBS pointed out that the success of JLR's premium models, including the Defender and Range Rover, is moderating. The order book for these models has now returned to pre-COVID levels, and discounts are expected to rise soon.
Despite these concerns, the bullish stance of Emkay Global offers a contrasting perspective, providing an alternative view for investors focused on share market investment.
Market activity and block deal transaction
On Tuesday, significant market activity occurred, with 1.9 crore shares (or 0.4 per cent of Tata Motors' total equity) changing hands in a block deal. This involved the sale of 1.14 crore shares by TML Securities Trust, a part of the company's fractional share entitlement distribution. Even with these transactions, Tata Motors' stock remained stable, trading at ₹974 at around 9:20 AM, up by 1.2 per cent from the previous close. The renewed optimism around Tata Motors has spurred share market investment, with Emkay's upgrade driving further interest.
In conclusion, while UBS has maintained a cautious approach, Emkay Global's upgrade offers a more optimistic outlook for Tata Motors. For those focused on share market investment, Tata Motors' recovery and potential for future gains present a key opportunity in the market.
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