Tata Motors shares slip from record high as CLSA downgrades stock to 'outperform'

Shares of Tata Motors Ltd dropped nearly a percent after foreign brokerage house CLSA downgraded the stock to 'Outperform' from 'Buy' earlier, citing the recent rally in the stock price.

However, CLSA is bullish on the Tata Group company's growth prospects and has increase the target price to ₹1,074 from ₹1,061 per share earlier, suggesting a further upside of 11% from the current market levels.

At 9:45 am the scrip was trading almost flat at ₹954 apiece on NSE. The Tata Motors stock has registered an all-time high of ₹976.3 apiece on Wednesday.

The multibagger stock has rallied 125% in a year and risen 21% so far this year. Tata Motors stock hit a 52-week low of ₹400.40 on March 28 last year.

CLSA was impressed by the robust volume growth put up by Tata Motors luxury vehicles arm Jaguar Land Rover (JLR).

Jaguar Land Rover reported a 14.5% year-on-year improvement in retail volumes in January 2024, whereas the brokerage highlighted that its volumes in the fourth quarter are tracking higher than that seen in the December quarter.

Moving forward, the global brokerage sees JLR's UK, European Union and China volumes growing 43%, 12% and 38% year-on-year, respectively.

CLSA said the discounts on Jaguar increased whereas those on Land Rover have declined in January 2024.

The global broking firm is also positive about the decline in JLR 's net debt levels by £675 million and forecasts the company to turn net cash by FY25.

Another brokerage HSBC has maintained its 'Hold' rating on the Tata Motors stock with a target price at ₹920 per share.

The foreign broking firm also said that the Tata Motors luxury vehicles arm's market share last year among premium OEMs is up 450 basis points to 20%, exceptionally strong sales in February to March 2023.

HSBC noted that JLR discounts or incentives in the US have significantly increased but still lower than competition.