Tata Motors shares gain as CLSA upgrades to 'high conviction outperform'

he Tata Motors share price has tanked 12 percent in the last month and is currently down 50 percent from its all-time high.

Shares of Tata Motors gained 1 percent to Rs 688 in morning trade on February 19, bouncing back from yesterday's fall, after CLSA upgraded the stock to a high-conviction 'outperform' rating from 'outperform' suggesting positive levers for growth.

The international brokerage has set a price target of Rs 930, implying a massive upside potential of 36.3 percent from the last close on the National Stock Exchange. The Tata Motors share price has tanked 12 percent in the last month and is currently down 50 percent from its all-time high.

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CLSA analysts suggest that this is an attractive entry point despite near-term challenges. Jaguar Land Rover (JLR) is currently trading at 1.2x FY27 EV/EBITDA, significantly below its normative multiple of 2.5 times. At the current stock price, JLR’s implied per-share value stands at approximately Rs 320, compared to a target valuation of Rs 450 in a sum-of-the-parts analysis.

This provides a cushion against risks such as US tariff hikes and weaker-than-expected demand and margins. Additionally, CLSA expects a cyclical recovery in the medium and heavy commercial vehicle segment from FY27, which could start reflecting in valuations in the coming quarters.

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In Q3, the company reported a 22 percent year-on-year drop in consolidated net profit to Rs 5,451 crore for the third quarter of FY25, missing analyst estimates. The automaker’s performance was weighed down by weaker margins and subdued Jaguar Land Rover (JLR) volumes, despite a sequential improvement. Revenue from operations rose 2.7 percent on-year to Rs 1,13,575 crore, driven by a modest improvement in overall sales.

The segment recorded a 4.3 percent decline in revenue to Rs 12,354 crore. Despite this, EBITDA margin improved by 120 basis points to 7.8 percent, helped by cost-cutting measures and PLI incentives. The company’s electric vehicle (EV) sales in the personal segment rose 19 percent on-year, though fleet sales were impacted by the expiry of FAME II subsidies.

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Tata Motors is hopeful that demand will improve gradually, supported by infrastructure investments, upcoming product launches, and stable interest rates. JLR’s wholesale volumes are projected to improve further in the fourth quarter, though the company remains cautious about overall demand trends, particularly in China.

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