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 With JP Morgan’s Upgrade for JLR’s Cash Flow and Solid Margin, Tata Motors Gained 2%

On January 4, Tata Motors broke a two-day losing run and closed 2.1 percent higher at Rs 798. This came after global stockbroker JPMorgan upgraded the stock to ‘overweight’ and significantly raised the target price, citing a number of growth levers.

JPMorgan has updated its target price for the stock to Rs 925, which is 36% higher than the previous objective and represents an 18% increase from the last closing price of Rs 781.

JPMorgan analysts stated that while luxury original equipment manufacturers (OEMs) around the world prioritize profitability over volume, the upgrade was motivated by Jaguar Land Rover (JLR), the British division of the auto major, posting better-than-expected margins and free cash flow.

One of the factors contributing to JP Morgan’s improved rating on the counter was its consistent market share in passenger cars, even in the face of fierce rivalry from competitors.

The top producer of electric vehicles in the nation revealed a 5% increase in overall car sales for December. Tata Motors sold 77,855 units in December, compared to 74,356 units in the same month last year. The number of passenger car sales increased by 8% to 43,675 units during the month.

Tata Motors, which closed the year close to its all-time highs, was the only other Nifty 50 stock to see its price double in 2023. Due to a positive outlook for its JLR business, promising future possibilities for its electric vehicles, and increased demand for SUVs due to rising disposable incomes, the stock also made it to the top picks among auto stocks for the majority of brokerages.

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