Auto stock to buy: Analysts recommend buying Tata Group stock for up to 28% gains, check target price

Auto stock to buy: After starting at a record high on Wednesday, June 19, the Indian benchmark saw a flat trading day. The Nifty 50 finished at 23,516, a 41.9-point low, and reached a record high of 23,664.00, while the Sensex closed in green at 77337.59, up 36 points. 

Today, the Bank Nifty advanced nearly 1400 points, reaching a new all-time high.

The Nifty's leading gainers were private banks. The HDFC Bank, Axis Bank, RBL Bank, ICICI Bank, IndusInd Bank, and Kotak Bank all made significant gains in today's session. 

For the first time, the Nifty reached 51,900, with Axis Bank leading the way, followed by HDFC Bank, ICIC Bank, and IndusInd Bank. 

Meanwhile, analysts suggest buying this automobile stock for long term.

Tata Motors share price target

Zee Business analyst Nupur Jainkunia suggests investors buy automobile stock Tata Motors for one year. On Wednesday, June 19, the stock closed at Rs 977.4 each, down 0.9 per cent or 8.25 per share on BSE.

Jainkunia has given a target price of Rs 1,250 per share. The target implies an upside of around 28 per cent from Wednesday's closing price.

Brokerage Sharekhan also maintained its 'buy' rating on the stock with a target of Rs 1,235. The target implies an upside of up to 26 per cent from Wednesday's closing price.

Why brokerage Sharekhan is bullish on the stock

"We maintain our buy on Tata Motors Ltd (TML) with a sum-of-the-parts (SOTP)-based unchanged PT of Rs 1235 on expecting continued improvement in JLR, PV, and CV businesses and reduced net automotive debt," said the brokerage.

"After delivering strong performance in FY24 the management has been optimistic on the growth prospects in both CV and PV segment. An improvement in operating performance has been visible in reduction in net automotive debt and cash generation as TML has announced a dividend in the second consecutive year in FY24," added Sharekhan.

According to the brokerage, Tata Motors continues to focus on profitability in most of the divisions and considering digital penetration as a tool to boost its positioning in the fragmented CV segment. It looks for a double-digit EBITDA margin in the PV and CV business while aiming for an EBITDA breakeven in the EV business by FY26.

However, TML’s business is dependent upon cyclical industries such as CVs and PVs. Moreover, the company operates across the globe. Any slowdown or cyclical downturn in any of the locations where the company has a strong presence can affect business and profitability. The company’s operations can be further affected if the ongoing global chip shortage worsens, said Sharekhan.