The big upgrade from CLSA- it has upgraded Tata Motors to High Conviction Outperform from Outperform with a target price of Rs 930. This implies over 30% upside from current levels.
The stock has corrected 40% in the past six months on account of various reasons including weak demand outlook for JLR across key markets and moderation in demand expectation for HCVs and PVs in the local market. Additionally, the risk of import tariffs getting implemented in the US from the EU and its impact on JLR’s US sales is also weighing on the sentiment.
The question then is what triggered the upgrade from CLSA?
Here is a quick look at 5 reasons why CLSA expects the Tata Motors share price to rally – 1. Implied value of JLR attractive
The CLSA report highlights how they are expecting JLR to clock “7% volume, 8.8% average EBIT margin for FY26-27CL, average capex of GBP4.4bn for FY26-27CL,” after a few flat years. Additionally, they believe that “in FY27, JLR’s free cash flow could be 1.7 billion pound after registering sub-1 billion pound of free cash flow for two years.” They see the “Implied value of JLR at today’s price at Rs73,000 crire (Rs200/share), resulting in it operating at an attractive 23% FCF yield.”
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CLSA believes that the adversities in the JLR’s business model are already priced in. CLSA’s sensitivity analysis of per share value of JLR indicates “that it would decline by Rs 28. With per share fair value of JLR already being down to Rs 200 from Rs 450, we believe these adversities are well priced in and current correction is giving scope to add.”
3. BMW and Daimler recover from November lows
CLSA pointed out that some of JLR’s key peers BMW, Daimler have recovered 25% from their November lows till date. After the December quarter performance when JLR delivered 3% YoY volume growth with EBIT margin at 9.1%, they “expect JLR to be on course for a seasonally strong Q4, thus delivering better numbers compared to December quarter and “it is sitting on well managed inventory levels.”
4. Jaguar EVs in mid-CY26
CLSA is betting on JLR’s EV plans as well.
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