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Nomura’s Upgraded Target Price
Nomura has recently upgraded Tata Motors to a ‘Buy’ rating, raising its target price to Rs 1294. This upgrade comes as a result of potential significant upsides in Jaguar Land Rover’s (JLR) execution. According to Nomura, successful execution by JLR could lead to considerable benefits for Tata Motors, reinforcing the decision to increase the target price.
Potential Value Unlock from Demerger
Another crucial factor behind Nomura’s optimistic outlook is the potential value unlock from the demerger of Tata Motors’ commercial vehicles (CVs) division. The demerger is expected to highlight the inherent value within the CV segment, providing an additional boost to Tata Motors’ valuation. This strategic move is seen as a catalyst that could further elevate the company’s market position and financial performance.
Increased Target Multiple for JLR
Nomura has also raised the target multiple for JLR to 3.5x EV/EBITDA from the previous 2.75x. This adjustment reflects the potential upsides that JLR’s successful execution could bring. The increase in the target multiple indicates Nomura’s confidence in JLR’s ability to drive significant growth and profitability in the future. This revised multiple further supports the upgraded target price of Rs 1294 for Tata Motors.
Conclusion
In summary, Nomura’s upgrade of Tata Motors to a ‘Buy’ rating with a target price of Rs 1294 is underpinned by multiple factors. These include the potential upsides from JLR’s execution, the expected value unlock from the demerger of the CV division, and the increased target multiple for JLR. Together, these elements contribute to a positive outlook for Tata Motors, making it a compelling investment opportunity.
