1:1 Split: Tata's Auto Stock Touch New 52-Week Low; What Will Be New Target, Rs 600, Rs 750 Or Rs 950?

Tata Motors Share Price: Tata Group-backed automobile giant has touched yet another 52-week low of Rs 674.10 apiece on BSE during its Wednesday trading session. Tata Motors which had a bearish 2024 and a bearish start to 2025, followed the market trend. This month, investors booked profits owing to its weak sales and Q3 results. However, this did not stop global brokerage Morgan Stanley from maintaining its 'Equal Weight' stance on Tata Motors with a target price of Rs 853. While broadly the consensus is BUY or Accumulate!

Tata Motors Share Price:

At the time of writing, Tata Motors stock price was trading at Rs 669.70 apiece, down by 1.2% on BSE, with market cap of Rs 2,46,529.24 crore. The stock touched new 52-week low of Rs 669 apiece in the early trade of February 12.

Year-to-date, the stock is down by 10%. In a year, Tata Motors has nosedived by 26%. In the past six months, the downside was even more intense by 37.3%.

Tata Motors Stock Fundamentals:

As per Trendlyne data, the fundamentals of Tata Motors stock are a mixed bag. Its Price Earning Ratio is 7.85, lower than its sector PE ratio of 30.77, while the Debt to Equity Ratio of 1.16 is higher than 1, which implies that company assets are financed through debt. Further, the Return on Equity(ROE) for the last financial year was 36.97%, more than 20% in the last financial year, indicating an efficient use of shareholder's capital to generate profit.

However, Mutual Fund Holding increased by 0.38% in the last quarter to 10.96. And, Promoter Share Holding stayed the same in the most recent quarter at 42.58%.

Tata Motors Share Recommendation:

Morgan Stanley in its latest recommendation, maintained its 'Equal Weight' on Tata Motors stock price for the target of Rs 853 per share. The recommendation comes after Tata Motors reported weaker-than-expected Q3 numbers. However, the company maintained its JLR FY25 EBIT Margin Guidance but lowered Revenue & RoCE Guidance trajectory. The company also stated that it will relook JLR's FY26 guidance after Q4 results.

Meanwhile, Prabhudas Lilladher's market analyst Vaishali Parekh expects more downside ahead in the stock. Parekh predicted that the could range between Rs 680 to Rs 660, however, if this support levels are breached then chances of Rs 600 mark is also likelihood.

However, in its latest report, KR Choksey said, "We have rolled over our valuation to FY27E estimates, applying EV/EBITDA multiple of 3.0x for JLR, 2.0x for the Chery-JLR JV, 12.0x for TML-PV, and 10.0x for TML-CV on FY27E EBITDA. Based on this, we revise our target price to INR 757 per share (previously INR 989), incorporating INR 36.0 for Tata Technologies (20.0% discount on holding). Subsequently, we maintain our ACCUMULATE rating on Tata Motors Ltd."

Unlike other brokerages, despite weak Q3, Emkay Global still maintained BUY and sees a target of Rs 950 in Tata Motors.

Emkay's note said, India CV outlook is improving amid green shoots in underlying metrics like fleet utilization levels, freight rates, and financing. Encouragingly, the India electric PV business turned EBITDA-positive (10%/1.7% margin with/without PLI); TTMT expects sequential improvement in both, CVs and PVs in Q4. We believe that while global demand uncertainties persist, JLR's focus on mix and profitability would help the broad-based improvement to continue (we build-in ~£1bn FCF and net-cash balance sheet in FY25E). We also expect the CV momentum to improve albeit gradually, amid slower than expected pick up in government infra/capex spends. We trim our EPS estimates by ~2.5% largely due to the Q3 margin miss; we maintain BUY with unchanged SoTP-based TP of Rs950.

Tata Motors is going to split into 1:1 ratio soon. The company's demerger will be of two separate listed companies housing A) the Commercial Vehicles business and its related investments in one entity and B) the Passenger Vehicles businesses including PV, EV, JLR, and its related investments in another entity. As part of the demerger plan, Tata Motors shareholders will get 1 share of TMLCV with a face value of Rs 2 each for every 1 share held in the company. This makes the business split ratio to 1:1.