Tata Motors shares rise as brokerages reiterate bullish stance on growth prospects

Tata Motors share have rallied six percent in the past week.

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Shares of Tata Motors rose nearly 2.3 percent to Rs 1,010 in early trade on June 12, continuing a fifth consecutive session of gains. Brokerages maintain bullish stance on the stock, buoyed by strong growth prospects outlined by the company during its investor meet. On June 11, the leading EV player unveiled investment plans of Rs 16,000-18,000 crore for its electric vehicle division until FY30.

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Jefferies has issued a buy call on Tata Motors, setting a target price of Rs 1,250 per share. The firm reiterates the company's focus on strengthening its brand and improving profitability across its passenger vehicles (PVs) and commercial vehicles (CVs) segments. Tata Motors aims to increase its market share in PVs to 16 percent by FY27 and to 18-20 percent by FY30.

Additionally, Tata Motors targets achieving a double-digit EBITDA margin in both its CV and PV (Internal Combustion Engine) segments and aims to break even in its electric vehicle (EV) segment by FY26.

The management also said it is confident of achieving financial stability by becoming net debt-free by fiscal year 2025. Additionally, the Nexon maker has set a targets of achieving a market share of over 25 percent across various segments.

Morgan Stanley has assigned an equal-weight rating with a target price of Rs 1,100 per share. The company's individual business units are now self-sustaining, making demergers the next logical step to further empower the business. The supportive macroeconomic environment is expected to extend the commercial vehicle (CV) business cycle, analysts said in a recent note.

The ICE segment is projected to generate positive and growing free cash flow (FCF), while the EV segment is expected to achieve neutral FCF in the medium term.

IncCred Equities is of the view that Tata Motors' commercial vehicle (CV) division has achieved an impressive return on capital employed (RoCE) of 36 percent in a year with flat volume growth.

Although the demerger process may take a year to complete, Incred prefers the CV business post-demerger. The gradual recovery in Tata Motors' India PV business and Jaguar Land Rover (JLR) performance has led to a reduced rating.

At about 9:45 am, shares of the company were trading at Rs 1,008, up 2 percent from the last close on the NSE. Tata Motors share have rallied six percent in the past week.

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