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The brokerage upgraded Tata Motors to “buy” from its earlier rating of “neutral”. It has a price target of ₹870 on the stock, which implies a potential upside of 18% from Thursday’s closing levels.
However, DAM Capital’s price target is well below Tata Motors’ recent peak of ₹1,170. The stock is down nearly 40% from those levels.
DAM Capital is anticipating a recovery in the entire auto sector in financial year 2026 due to favourable macros and as a result, considering the valuation comfort and a favourable risk-reward, it has upgraded shares of Escorts Kubota and Bajaj Auto, along with Tata Motors.
However, the brokerage does expect near-term challenges to persist for the next 1-2 quarters, with normalcy returning to the industry by mid-financial year 2026 and financial year 2027.
DAM Capital expects Jaguar Land Rover’s (JLR) volumes to grow at a Compounded Annual Growth Rate (CAGR) of 6.5% over financial year 2025-2027 and it is also factoring in slightly lower margins and lower valuation multiples for the CV, PV and JLR business.
For the bear case scenario, DAM Capital has a price target of ₹675 on the stock, which implies a potential downside of 9% from Thursday’s closing levels.
Among the 36 analysts who have coverage on Tata Motors, 22 of them still have a “buy” rating on the stock, nine say “hold”, while five of them have a “sell” rating on the stock.
Shares of Tata Motors ended 0.7% higher on Thursday at ₹741.5. The stock is down 5% so far in 2024 after the correction seen from the peak. The stock was the best Nifty 50 performer in 2023 and the only index stock that had doubled during the calendar year.
