The brokerage said Tata Motors’ actions on mix and cost should revive its subsidiary Jaguar Land Rover’s free cash flow generating potential. Besides, India’s commercial vehicle segment recovery is likely to continue after a severe downturn. JP Morgan said these factors should help the company’s deleveraging plans.
“We believe Tata Motors can achieve its zero net debt target by FY24 versus ₹60,400 crore currently, by continuing to execute its ‘self-help’ strategies of mix improvement and right-sizing of costs/ investments in JLR, model launch led market-share gains in India passenger vehicles, and strengthening its commercial vehicle leadership during a cyclical recovery,” said JP Morgan.
The stock has gained 51% in the last year compared to a 12% gain in the Sensex and a 5.25% rise in the auto index.
JP Morgan is also bullish on the Tata Group company as it dominates the nascent electrical vehicles segment with an 80% market share among Indian passenger vehicle makers.
The company recently announced the raising $1 billion from TPG for its electric vehicle business and will introduce 10 EV models by FY26.
JP Morgan’s bull case price target for Tata Motors is ₹783. It is predicated on EV leadership in Indian passenger vehicles and meeting medium-term targets at JLR, the brokerage said.
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