Tata Motors Ltd . (NSE:TAMO) has received a notable upgrade from global brokerage firm HSBC, which has raised its rating on the stock to "buy" from "hold" on Monday, March 17. The upgrade comes despite a revision in the target price to INR 840 from the previous INR 930, indicating a strong potential upside of 29% from current levels.
HSBC’s rationale behind the upgrade is based on a key re-rating trigger: the valuation of Tata Motors, which has seen a de-rating over the last two to three quarters. The brokerage highlights that Jaguar Land Rover (JLR), Tata Motors’ premium vehicle subsidiary, is currently trading at 1.8 times its estimated Enterprise Value-to-EBITDA (EV/EBITDA) for the financial year 2026—at the lower end of its historical average. This suggests a strong case for a valuation recovery.
Additionally, HSBC foresees an improvement in Tata Motors’ margin profile, driven by lower discounts and warranty costs for JLR, as well as a revival in the domestic Small Commercial Vehicles (SCV) segment. A crucial catalyst for the stock’s re-rating will be JLR meeting its financial guidance for the March quarter. Moreover, upcoming product launches in the domestic Passenger Vehicles segment are expected to help the company expand its market share.
The stock has faced a significant correction, dropping 48% from its peak of INR 1,179 in July 30, 2024 to a 52-week low of 606.3 in March 2025. In 2025 alone. However, with the company’s board set to meet on March 19 to discuss raising INR 2,000 crore through Non-Convertible Debentures (NCDs), the stock could witness a revival.
Valuation Perspective: A Golden Opportunity?
Investors seeking clarity on Tata Motors’ true valuation can leverage InvestingPro’s fair value feature, which provides an accurate assessment of stocks without the need for complex calculations. According to InvestingPro, Tata Motors’ fair value stands at INR 955.2 per share, signaling a remarkable 45.7% upside potential from the current market price of INR 655.5. This reinforces the notion that the stock remains undervalued, aligning with HSBC’s optimistic outlook.
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With HSBC’s upgrade, improving fundamentals, and a strong valuation case, Tata Motors appears to be a compelling bet for investors eyeing long-term gains.
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