Tata Motors Gains Attention Amid Tesla Partnership Speculation
Tata Motors shares are gaining attention amid rumors of a potential partnership with Tesla. The California-based electric vehicle giant, led by Elon Musk, is reportedly planning to establish a manufacturing plant in Maharashtra and is in discussions with Tata Motors for a collaboration. This development has sparked investor interest, as a partnership with Tesla could significantly impact Tata Motors' growth and market positioning.
CLSA upgrades Tata Motors: Tata Motors' share price is gaining attention not only due to the buzz around a potential partnership with Tesla but also due to an upgrade from brokerage firm CLSA. CLSA raised its rating on the company to ‘high-conviction Outperform’ from ‘Outperform’, with a target price of Rs 930. This upgrade is driven by a favorable valuation in light of the near-term challenges, encouraging investors to enter at a good price point. Following the rating change, Tata Motors' share price surged 1.3% to an intraday high of Rs 690.95.
CLSA’s analysis, using the sum of the parts valuation method, indicates that Jaguar Land Rover's (JLR) current share price of Rs 320 is 29% below the target price of Rs 450 per share. This provides a cushion against potential impacts from a US tariff hike and weaker-than-expected demand and margins. Although US President Donald Trump announced plans to impose a 25% tariff on automobile imports, he has yet to specify a timeline for implementation, adding further uncertainty to the market.
During an interview with Fox News, US President Donald Trump expressed that it would be "very unfair" to America if Tesla were to establish a manufacturing plant in India. He added “Every country in the world takes advantage of us, and they do it with tariffs. They make it practically impossible for him [Musk] to sell a car, as an example, in India”.
Tata Motors’ performance in Q3: For the reporting quarter, the company reported a 22% Year-on-Year (YoY) decline in net profit, which fell to Rs 5,451 crore. However, on a sequential basis, profit rose by 63%, up from Rs 3,343 crore in the second quarter of the current financial year. Revenue from operations saw a modest increase of 3% YoY, reaching Rs 1.13 lakh crore. The company’s operating profit, or EBITDA, stood at Rs 15,500 crore for Q3 FY25, reflecting stable performance despite the decline in net profit.
Tata Motors Vs Nifty 50: Tata Motors' share price has seen a modest increase of 0.12% over the past five trading days. However, the stock has experienced a significant decline, falling more than 12% in the last month and 38% over the past six months. Year-over-year, the shares are down by 27%. In comparison, the benchmark Nifty 50 index has also faced a downturn, losing 0.4% of investors' wealth in the last five trading days. It has fallen 1.8% over the past month and 6.7% in the last six months. Despite these declines, the Nifty 50 has posted a 3.7% return over the past year.
