Tata Motors shares jump after strong Q1 results as brokerages raise targets

Tata Motors shares rallied 6% in early trade on Thursday after its commercial vehicles division posted a strong performance for the June quarter. The stock emerged as one of the top gainers among Nifty 100 companies as investors reacted positively to better-than-expected earnings and optimistic brokerage views.The Tata Motors commercial vehicle stock traded at Rs 484.6, extending its gains after rising in the previous session ahead of the quarterly results. The shares have gained around 6.8% so far this year, outperforming the broader market, while the company’s market capitalisation crossed Rs 1.68 lakh crore.Tata Motors Consolidated Net Profit Rises 83% To ₹2,556 Crore In Q1 FY27 Future outlookBrokerages maintained a positive outlook on Tata Motors’ commercial vehicle business, highlighting strong demand conditions, price increases and expectations of margin expansion.According to a report by Moneycontrol, Nomura upgraded the stock to a ‘Buy’ rating with a target price of Rs 554 per share. The brokerage said the company’s first-quarter EBITDA exceeded expectations, supported by growth across business segments. It expects medium and heavy commercial vehicle demand to grow 8% year-on-year in FY27, compared with its earlier estimate of 5%.Tata Motors Partners With UCO Bank To Offer Commercial Vehicle Loans Across India Nomura also pointed to increasing electric vehicle adoption, with EV penetration reaching 10% in the small commercial vehicle segment. The brokerage said a 25% price increase implemented in July could support margins amid rising costs and supply challenges. It also highlighted export opportunities and the expected completion of the Iveco deal.CLSA retained its ‘Outperform’ rating with a target price of Rs 596 per share. Strong quarterly performance Tata Motors Commercial Vehicles reported an 83% year-on-year increase in consolidated net profit at Rs 2,560 crore for the quarter ended June 30. Revenue from operations increased 19.3% to Rs 20,667 crore, while EBITDA rose 8.6% to Rs 2,640 crore.The company’s EBITDA margin improved to 15.83% from 11.98% in the same quarter last year, driven by demand from infrastructure, logistics and freight sectors.Analysts expect Tata Motors’ commercial vehicle business to benefit from continued demand growth, pricing actions, cost-control measures and expansion in electric mobility. The positive outlook has strengthened investor confidence in the stock’s future performance.

Shares of commercial vehicle major Tata Motors rallied as much as 6% to their day’s high of Rs 485 on the BSE on Thursday after it reported a net profit of Rs 2,560 crore in the first quarter of FY27, a jump of 83.3% from Rs 1,397 crore reported in the same period last year.Tata Motors said that the increase in net profit was led by a mark-to-market gain on investments in Tata Capital.The company’s revenue from operations came in at Rs 20,667 crore, up 19% from Rs 17,324 crore in the corresponding quarter of the previous financial year, the Tata Group company said post-market hours.For the quarter under review, the company’s EBITDA rose to Rs 2,300 crore, up 10% year-on-year, while the EBITDA margin stood at 10.9%, down 90 basis points. The drop in margins comes on the back of a 13% year-on-year increase in total expenses.Also read: Chandra’s Rs 25 lakh crore Tata legacy: Revenue up 71%, PAT 3.6x and a 19x multibaggerWhat are experts saying?Nomura has upgraded Tata Motors to Buy from Neutral and assigned a target price of to Rs 554 from Rs 402, implying an upside of 21% from current levels. Nomura expects TMCV to benefit from its focus on EVs and a strong export orderbook.The 2.5% price hike taken in July should also support margin improvement. IVECO's better 2QCY26 performance provides further comfort, while Nomura sees strong potential for IVECO to improve margins over the next 2-3 years through sourcing from low-cost countries, posing a potential upside risk to its estimates.CLSA has an Outperform rating on Tata Motors CV with a target price of Rs 596 (30% upside). The brokerage said TMCV's Q1 EBITDA margin of 11.3%, down 76 bps YoY, was around 50 bps above consensus. TMCV attributed most of the margin decline to commodity inflation, which had a negative impact of 340 bps YoY, partly offset by operating leverage and price hikes, which contributed 140 bps positively.While commodity costs remain inflationary, TMCV expects the impact to be mitigated through price actions, including the 2.5% price hike taken in July, along with ongoing cost reduction measures. On demand, TMCV said underlying momentum remains healthy and expects CV industry demand to remain robust, with 2QFY27 volumes likely to post double-digit growth.Motilal Oswal has maintained a Neutral rating on Tata Motors with a target price of Rs 434, implying a downside of 5%. Following the better-than-expected Q1 performance, the brokerage has raised its earnings estimates by 6% for FY27 and 2% for FY28.Read more: N Chandrasekaran era delivered 3.3X market cap growth. Can Tata stocks keep winning after his exit?It now expects TMCV to deliver a CAGR of 12% in revenue, 10% in EBITDA and 12% in PAT over FY26-28E. At 23.5x FY27E and 20x FY28E EPS, the stock appears fairly valued, according to the brokerage. Motilal Oswal values the core business at 12x FY28E EV/EBITDA, in line with peers, and assigns Rs 15 per share to Tata Motors' stake in Tata Capital.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)