Tata Motors stocks experienced a rise early on Monday after HSBC upgraded Tata Motors from Hold rating to Buy. At 9:57 am, the stock price was up by 1.16% and was trading at 663 on the BSE.

HSBC revised their target price to 840, dropping from an earlier estimate of 930. While the drop is significant, at the revised target price an appreciation of about 29% from the current price would be expected. Improved margins for Tata Motors are being forecasted by the brokerage owing to solid performance by Jaguar Land Rover (JLR) along with improved conditions in Tata Motors' domestic operations.

JLR's Increasing Profitability

The outlook on JLR remains positive from HSBC's perspective, especially with the reduction in discounts and warranty costs, which is a testimony of building pricing power and profitability. The brokerage believes re-rating of the stock will happen, should JLR meet annual guidance for the March quarter.

HSBC also drew attention to how the JLR valuation has declined over the previous quarters. Presently, JLR trades at 1.8x FY26 EV/EBITDA, at the weak end of its long-term trading range.

Recovering Domestic Operation

The brokerage noted that Tata Motors' small commercial vehicle (SCV) sales improved, which can be attributed to demand pickup in logistics and transportation. In addition, the impending new model launches can be a boost for Tata's passenger vehicle (PV) segment further strengthening its position in the Indian market.

Attractive Valuation

The stock has fallen by 12% in 2025 and is close to its 52-week low. The stock was down 45% from the highs of Rs 1,179 in July 2024. HSBC sees this correction as a great buying opportunity with an improving fundamental outlook.

The company's board meeting on March 19, 20XX will discuss raising ₹2,000 crores through NCDs.

Afterwards are some catalysts that improving the JLR margins, recovering domestic business, and product launches. HSBC sees the company poised to turn around. According to analyst estimates, a 25% potential upside is anticipated from the current level.