Tata Motors, Ashok Leyland shares rise up to 5% on positive brokerage notes for CV players: Should you buy, sell or hold?

Tata Motors, Ashok Leyland shares rise up to 5% on positive brokerage notes: Should you buy, sell or hold?

• Tata Motors and Ashok Leyland shares surged after positive brokerage notes
• Nomura raised target prices, citing strong CV demand and sector upcycle
• Ashok Leyland and Tata Motors CV both received 'Buy' calls from Nomura

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The shares of Tata Motors, which now represent its commercial vehicle business, and Ashok Leyland jumped in trade on January 22 as positive brokerage notes boosted investment sentiment for the automakers.

Tata Motors shares rose more than 4 percent to Rs 453.8 apiece. Ashok Leyland shares meanwhile jumped over 5 percent to Rs 190.48 apiece, marking the biggest single-day rise in eight weeks.

Nomura said that the CV upcycle is gathering pace, adding that dealers suggested that sectors such as cement, steel, e-commerce and autos are driving demand.

Nomura on Ashok Leyland:

The international brokerage kept a ‘Buy’ call on Ashok Leyland, and raised its target price to Rs 216 per share. This implies an upside potential of more than 19 percent from the stock’s previous closing price of Rs 181.24 apiece.

Nomura believes that Ashok Leyland is a pure-play beneficiary of ongoing upcycle in domestic M&HCV industry. This is supported by improving freight rates and better fleet operator profitability, along with lower GST rates and an ageing truck fleet.

Nomura on Tata Motors CV:

It kept a ‘Buy’ call on Tata Motors CV, and raised its target price to Rs 552 per share. This implies an upside potential of nearly 27 percent from the stock’s previous closing price of Rs 434.85 apiece.

Nomura said that Tata Motors CV continues to benefit from its dominant position in domestic CV market. It expects the firm to post a healthy 10%/10%/5% YoY volume growth in FY26-28F, with EBITDA margins expanding to 12-13% over FY26-28F.

Citi said that while direct impact of price cuts post GST reductions would be relatively lower for commercial vehicles compared to passenger vehicles or two-wheelers, overall increase in goods demand could be a positive driver.

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