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A critical factor in HSBC’s buoyant view is Tata Motors’ subsidiary, Jaguar Land Rover (JLR). It’s note also highlights how improved pricing power alongside operational efficiency at JLR will increase profitability due to lower discounts and warranty costs being offered. Further, JLR achieving its Q4 guidance could act as a re-rating trigger which will allow the stock to recover investor confidence.
HSBC believes that an increase in sales of Small Commercial Vehicles (SCVs) is a positive signal for the recovery of Tata's domestics operations. At the same time, the passenger vehicle (PV) unit is likely to strengthen its market share with new models that might allow the company to continue growing in the fiercely contested Indian auto market.
Although some valuation was lost during the last 2-3 quarters, Tata Motors now looks undeperforming. HSBC pegged the stock’s EV/EBITDA for FY26 at 1.8x, which is in the lower end of the cutsomary range. Considering the improving fundamentals, the brokerage thinks that with how things are, the stock is a must have for ETF investors.
Considering everything from the growing margins of JLR, alongside the expansion of the domestic market, and the launches of new products, Tata Motors seems well - positioned for strong performance in the upcoming quarters. According to the revised outlooks, HSBC suggests that the recent movements in the stock should be viewed as a potential opportunity for investment.
