Tata Motors gains 2% on JP Morgan upgrade over JLR cash flow, strong margin

Shares of the company have gained 103 percent in a year

Tata Motors snapped its two-day losing streak to trade 2.1 percent higher at Rs 798 on January 4 after global brokerage JPMorgan upgraded it to 'overweight' and gave a huge raise to the target price, citing various levers for growth.

JPMorgan’s revised target price of Rs 925 on the stock is 36 percent higher than the previous target, and implies an upside of 18 percent from the last closing price of Rs 781.

Analysts at JPMorgan said the upgrade was driven by better-than-expected margins and free cash flow at auto major's British arm Jaguar Land Rover (JLR), as global luxury original equipment makers (OEMs) push for profitability over volumes.

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JP Morgan cited a resilient market share in passenger vehicles despite stiff competition from rivals as also one of the reasons for its upgraded rating on the counter.

As for December, the country's leading electric vehicle manufacturer reported a 5 percent on-year rise in total vehicle sales. Tata Motors sold a total of 77,855 units in December, up from 74,356 a year ago. Sale of passenger vehicles jumped 8 percent to 43,675 units in the month.

Also read: Driving out in style: Tata Motors becomes first Nifty stock to double in 2023

Tata Motors was also the only Nifty 50 stock that saw its price double in 2023 as it ended the year near its all-time highs. The scrip also made it to the top picks among auto stocks for most brokerages on the back of a robust outlook for its JLR business, strong prospects for its electric vehicles, and demand for SUVs amid a rise in disposable incomes.

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