Tata Motors' market cap crosses Rs 4 lakh crore mark after Nomura's upgrade 

Auto major Tata Motors achieved a significant milestone on Thursday as its market capitalisation breached the esteemed Rs 4-lakh crore mark for the first time. The company's shares experienced a notable rally of 6.2%, ending at Rs 1,091, after receiving an upgrade from Nomura. Prior to this surge, the Tata group firm held a valuation of Rs 3.63 lakh crore.

International brokerage Nomura revised its rating for Tata Motors to 'Buy' from the earlier recommendation of 'Neutral'. It revised its price target by 26% upward to Rs 1,294 from Rs 1,141 earlier. Nomura said Jaguar Land Rover's (JLR) execution can lead to significant upsides for the Tata Motors stock.

This, coupled with the proposed demerger, will unlock value for the commercial vehicle business, Nomura added, which re-rated the stock to 11 times its enterprise value-to-Ebitda from 10 times.

Nomura analyst Kapil Singh stated: "We raise our target multiple for CVs to 11x EV/EBITDA (from 10x), in line with Ashok Leyland. Demerger may lead to better value discovery, in our view. We maintain PV valuation at 1.5x EV/sales on average FY26-27F sales and investments at Rs 144 per share. The stock is currently trading at 5.4x FY26F EV-EBITDA. TTMT’s net debt of Rs 16,000 crore (Rs 44/share) in FY24 may move to net cash of Rs 57/Rs 140/share by FY26/27F."

Tata Motors has recently unveiled a proposed demerger plan aimed at separating its passenger vehicle (PV) and commercial vehicle (CV) businesses. This strategic move is anticipated to unleash significant value especially for the commercial vehicle segment of the company.

The favourable outlook from brokerage analysts has propelled Tata Motors' stock price to soar by over 4%, reaching an unprecedented peak of Rs 1071 during the early trading session today, surpassing the previous closing mark of Rs 1,027.65 on the Bombay Stock Exchange (BSE). Demonstrating remarkable bullish momentum, the stock of Tata Motors has manifested substantial growth, posting a notable 67% increase over the past year and a remarkable surge of 137% over a two-year period.

Noteworthy is the fact that Tata Motors' stock, which witnessed a 52-week low of Rs 593.50 on August 25, 2023, has experienced a promising upward trajectory. On the BSE platform, a considerable volume of approximately 4.87 lakh shares were exchanged today, culminating in a total turnover amounting to Rs 51.37 crore. The market capitalisation of Tata Motors has concurrently risen to an impressive Rs 3.55 lakh crore, reflecting the confidence and optimism surrounding the company's future prospects.

Tata Motors holds the position as the second-most valuable company following Tata Consultancy Services. The company's shares have surged by 38% since the beginning of the year. Notably, Tata Motors revealed its strategic decision to establish two distinct entities: one dedicated to the commercial vehicles segment and the other focused on passenger vehicles, which includes Jaguar Land Rover (JLR).

The upcoming financial report for Tata Group's subsidiary is scheduled to be disclosed on August 1. During the period of January to March 2024, the company achieved a net profit of Rs 17,407 crore, benefiting significantly from a tax credit of Rs 8,159 crore. Additionally, in the fourth quarter of the fiscal year 2022-2023, Tata Motors recorded a net profit of Rs 5,400 crore.

Notably, the revenue for the fiscal quarter spanning January to March of 2023-24 exhibited a noticeable upsurge of 14%, reaching Rs 1.20 lakh crore, a substantial increase from Rs 1.05 lakh crore in the third quarter of the fiscal year 2023.