JPMorgan just upgraded Tata Motors to ‘overweight’ from ‘neutral’ and raised its target price by Rs 245, or 36 per cent, to Rs 925, citing the auto maker’s better-than-expected margin and free cash flow. The upgrade from the global brokerage comes on the back of strengthening margin at the auto giant’s wholly-owned subsidiary, Jaguar Land Rover (JLR). Its target implies an 18.4 per cent upside in the Tata group stock from its previous close.  

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Tata Motors shares rose by as much as Rs 16.65, or 2.1 per cent, to Rs 798 apiece on Thursday to trade within Rs 6 of a record high registered this week.  

The brokerage also highlighted that the company, despite competitor launches, commands a resilient market share in the country’s passenger vehicle market. It also mentioned balance sheet deleveraging by the auto company.  

Balance sheet deleveraging should reduce EPS volatility and lead to a potential rerating for Tata Motors, according to the brokerage, which also increased its FY25-26E EPS estimates for the company by 20- 30 per cent. 

In December, the company posted a 5 per cent increase in sales in the passenger vehicle market domestically on a year-on-year basis, which propelled the stock to a new all-time high of Rs 804. 

Tata Motors shares: Past performance  

Tata Motors shares more than doubled investors’ money in 2023. In fact, the stock emerged the only Nifty50 constituent to deliver a return of more than 100 per cent in the year that saw the Nifty50 rising more than 20 per cent its best year since 2021 powered by sustained domestic mutual fund inflows, the return of foreign buying, better-than-expected macroeconomic growth and steady corporate earnings.