After 7 straight months of losses, Tata Motors poised for 38% upside, says Morgan Stanley

Tata Motors Ltd. could see its stock price rise 38 percent from Tuesday’s closing level, as per a March 5 note from Morgan Stanley. Despite the bullish upside projection, the brokerage maintained an “equalweight” rating—equivalent to a neutral stance—on the stock, setting a target price of ₹853.

Key Drivers

Morgan Stanley highlighted robust retail sales growth for Land Rover in the US as a key positive for Tata Motors. According to the brokerage, Land Rover’s retail sales in the US surged 79 percent year-over-year (YoY) to 11,900 units in February 2025, marking an improvement from 70 percent YoY growth in January and 34 percent in December 2024. The high-margin premium model mix stood at 76 percent in February, slightly lower than 78 percent in December 2024, it noted.

According to MS, Land Rover’s incentives grew 69 percent YoY, showing a slowdown compared to 73 percent YoY in January 2025 and 150 percent in December 2024. Meanwhile, Jaguar’s retail sales in the US rose 2 percent YoY to 975 units, the brokerage stated.

The US remains a critical market for Jaguar Land Rover (JLR), contributing 23 percent of JLR’s global sales in FY24 and approximately 15 percent of Tata Motors’ consolidated revenue, said the brokerage.

Another key event to watch, according to Morgan Stanley, is the European Commission’s Industry Action Plan, expected on March 5. A potential shift towards flexible CO2 regulations could benefit JLR, offering it greater leeway to comply with stringent emissions norms.

Tata Motors’ February Sales Decline 8% YoY

Tata Motors reported total sales of 79,344 units in February 2025, down 8 percent from 86,406 units in February 2024. The company’s domestic sales fell 9 percent YoY to 77,232 units, while the international business segment grew 34 percent YoY to 2,112 units.

Passenger vehicle (PV) sales stood at 46,811 units, reflecting a 9 percent YoY decline, while commercial vehicle (CV) sales dropped 7 percent YoY to 32,533 units.

Q3 FY25 Financial Performance

Tata Motors’ net profit for Q3 FY25 declined 22 percent YoY to ₹5,451 crore. EBITDA came in at ₹15,521 crore, registering a 1.9 percent YoY de-growth, while the EBITDA margin contracted to 13.7 percent in Q3 FY25, down from 14.3 percent in Q3 FY24.

Despite the near-term challenges, Tata Motors expects domestic demand to improve gradually, driven by infrastructure spending, new product launches, and stable interest rates.

Stock Performance and Outlook

Following Morgan Stanley’s note, Tata Motors’ share price surged 3.2 percent in intraday trade on March 5, reaching a day’s high of ₹639. However, the stock remains 46 percent below its all-time high of ₹1,179.05, recorded in July 2024.

Over the past year, the auto stock has lost 37 percent, extending its downtrend for seven consecutive months since August 2024. The stock declined over 13 percent in February 2025, reflecting weak sentiment in recent months.

However, in the long-term horizon, Tata Motors has delivered substantial gains, rising 390 percent over the past five years.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.