Tata Motors shares hit 52-week high; here's what driving the rally

Tata Motors shares clock a 52-week high on Thursday (July 25) after global brokerage Nomura double upgraded the stock to 'buy'. The brokerage raised the target price from Rs 1,141 to Rs 1,294 apiece.

At the last count, Tata Motors shares were up 3.79 per cent or Rs 38.9 at Rs 1066.55 apiece on BSE. The market capitalisation of the company at around the same time stood at Rs 3,54,386.01 crore. 

As per Nomura, Tata Motors' shares are expected to see a rally due to the strong execution of the Jaguar Land Rover (JLR) order book. JLR's order book at the end of March 2024 stood at 1.33 lakh units. 

The brokerage expects strong earnings growth on the back of JLR's average selling price (ASP). It also reckons margin to gain. 

Further, JLR transitioning from premium to luxury and is ahead of its peers. In Nomura's view, the current strategy is working well.

The brokerage raised JLR's estimated EV/EBITDA to 3.5x from 2.75x. As per them, the demerger will unlock the value of the Commercial Vehicle (CV) business. The brokerage estimates the company's net cash at Rs 5,700 crore by FY26 compared to debt of Rs 16,000 crore in FY24. Moreover, the stock is trading at 5.4x EV/EBITDA FY26.

Vikas Sethi of Sethi Finmart recommended buying Tata Motors futures for a target price of Rs 1,050 with a stop loss of Rs 1,010.

Tata Motors share price: Past performance 

In a year, shares of Tata Motors rose over 65 per cent against Nifty50's rise of over 23 per cent.

In five years, shares of Tata Motors have given over 621 per cent returns against Nifty50's rise of 115 per cent.

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