JPMorgan is ‘overweight’ Tata Motors Ltd., betting on ‘the automaker’s commitment to balance sheet deleveraging’ and ‘structural strengthening of its business – India and Jaguar Land Rover’.
The maker of the Tiago and Safari can achieve its goal of net zero debt by FY24 by continuing to execute its “self-help” strategies, the research house said in a Feb. 16 note as she threw a cover on the title.
These strategies include:
Improve the mix towards the most profitable Land Rovers and right-size costs in JLR to boost free cash flow.
To have market share gains induced by the launch of models in the passenger vehicle segment in India.
Strengthen its leadership in utility vehicles during a cyclical recovery.
Tata Motors, he said, also leads the nascent electric vehicle segment – 1% penetration in India – in passenger vehicles with an 80% market share. The company has announced a fundraising of Rs 7,500 crore from TPG for its new EV subsidiary. The UK-based JLR is also improving on electrification.
JPMorgan has set a price target of Rs 630 each for Tata Motors, implying a 26% upside from current levels. In its bullish fair value, the stock could still reach Rs 783, up 57%, if Tata Motors continues to be a leader in electric passenger vehicles in India and meets JLR’s medium-term targets.
Separately, JLR said in a statement that it has formed a multi-year strategic partnership with Nvidia to jointly develop and deliver next-generation automated driving systems and artificial intelligence-based services. From 2025, all new JLR vehicles will be built on an Nvidia Drive software-defined platform.