Tata Group stock to buy now for an upside potential of 35%; Do you own it?

India’s passenger car market is valued at USD 42.72 billion in 2024, projected to reach USD 53.04 billion by 2029. While overall passenger vehicle sales declined by 3.4% in September, utility vehicles grew by 6.7%. SUVs dominate with a 41% market share, with sales expected to reach 1.37 million units.

Price movement

With a market capitalization of Rs 2.52 lakh crore, the shares of Tata Motors Ltd closed at Rs 687.40 per share, increased around 0.85 percent as compared to the previous closing price of Rs 681.60 apiece.

Brokerage target 

CLSA, one of the well-known brokerages globally, gave a ‘buy’ call on the automobile stock with a target price of Rs 930 apiece, indicating a potential upside of 35 percent from Wednesday’s price of Rs 687 per share.

Brokerage rational

As per the CLSA, this is an attractive entry point despite near-term challenges. Jaguar Land Rover (JLR) trades at 1.2x FY27 EV/EBITDA, well below its normative 2.5x multiple. At the current stock price, JLR’s implied value is around Rs 320 per share, with a target valuation of Rs 450 in a sum-of-the-parts analysis.

Furthermore, this helps mitigate risks like US tariff hikes and weaker demand or margins. CLSA also anticipates a cyclical recovery in the medium and heavy commercial vehicle segment from FY27, which could begin influencing valuations in the coming quarters.

Meanwhile, In Q3 FY25, the company reported a 22% YoY drop in consolidated net profit to Rs 5,451 crore, missing estimates. Weaker margins and subdued Jaguar Land Rover (JLR) volumes impacted performance, despite sequential improvement. Revenue rose 2.7% YoY to Rs 1,13,575 crore, driven by modest sales growth.

Additionally, the segment’s revenue fell 4.3% to Rs 12,354 crore, but the EBITDA margin improved by 120 bps to 7.8% due to cost-cutting and PLI incentives. Personal EV sales grew 19% YoY, while fleet sales declined following the expiry of FAME II subsidies, impacting overall performance.

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Segment Performance

Tata Motors’ CV segment saw an 8.4% YoY revenue decline to ₹18,400 crore, but margins improved with cost-saving and PLI benefits. Trucks and buses gained market share, while PV sales hit record highs, boosting EV penetration to 24%. Strong SUV demand and festive sales drove growth.

New development

Tata Motors launched the all-new Sierra and Harrier EV at the Auto Expo, along with new BEVs and hydrogen ICE trucks. Its Fleet Edge platform now has 760,000+ active vehicles, while E-Dukaan and Fleet Verse grow rapidly. Sustainability efforts include Zero Waste certification and decarbonization initiatives.

Management comments

Management remains optimistic about a gradual rise in domestic demand, driven by infrastructure spending and new product launches. Meanwhile, JLR expects improved wholesales in Q4, dependent on retail growth, reflecting positive market trends and potential recovery in the automotive sector.

Company Profile

Tata Motors Group is a top worldwide automaker. As part of the legendary multinational corporation, the Tata Group, provides the globe with a diversified portfolio of automobiles, sports utility vehicles, trucks, buses, and defense vehicles.

Written by Abhishek Singh

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