Tata Motors to Undergo 1:1 Split Amidst Bearish Momentum; CLSA Upgrades Rating to ‘High Conviction Outperform’

Tata Motors, the automobile giant of the Tata Group, has continued its bearish momentum for the third consecutive day this week. On February 20th, the heavyweight large-cap stock touched an intraday low of Rs 675.30 apiece, just Rs 8.3 away from its 52-week low. Tata Motors’ share price has been below the Rs 700 mark since February 10th. Despite the bearish tone, brokerage firm CLSA has upgraded its stance on Tata Motors.

#### CLSA’s Take on Tata Motors

Global brokerage CLSA has upgraded its rating to ‘High Conviction Outperform’ on Tata Motors, while keeping its target price unchanged at Rs 930 apiece. CLSA believes that Tata Motors’ adverse near-term outlook signals scope for favorable valuation.

Tata Motors’ share price has been under pressure since late 2024, falling by 26.4% over the past year. In the past six months, the stock has plunged by over 37%. According to CLSA, the downfall is due to the weak demand outlook for its luxury brand Jaguar Land Rover (JLR) across key markets, coupled with a slowdown in demand for commercial and passenger vehicles for FY26.

Additionally, concerns over import tariffs being implemented in the US and Europe are impacting JLR’s sales in the United States, further fueling the bearish sentiment around Tata Motors. CLSA also pointed out that JLR is currently performing at 1.2 times its FY27CL EV/EBITDA, which is half of its normative multiple of 2.5 times.

However, CLSA believes that JLR’s implied per share value comes to around Rs 320 compared to its target price of Rs 450, which should offer a cushion against US tariff hikes and weaker-than-expected demand and margin. CLSA anticipates a cyclical revival from FY27, which will begin getting priced in the upcoming quarters.

#### Tata Motors Share Price

At the time of writing, Tata Motors’ share price traded marginally up to Rs 682.60 apiece on the BSE, with a market cap of Rs 2,51,277.98 crore. The stock touched an intraday low of Rs 675.30 apiece, just Rs 8.3 away from hitting a 52-week low of Rs 667.00. The stock was also a couple of rupees away from its lower circuit of Rs 612.80 apiece.

Tata Motors’ share price has nosedived by nearly 43% from its 52-week high of Rs 1,179.05 apiece against the February 20th intraday low. As of February 20, the stock’s price-to-equity ratio stands at 40.58x and 20.24%.

#### Tata Motors Split

Tata Motors is set to undergo a 1:1 split soon. The company’s demerger will result in two separate listed companies: one housing the Commercial Vehicles business and its related investments, and the other housing the Passenger Vehicles businesses, including PV, EV, JLR, and its related investments. As part of the demerger plan, Tata Motors shareholders will receive 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 1:1.

The demerger is expected to allow the businesses to pursue their own strategies, differentiate themselves, and enhance value for shareholders. The record date for the demerger is expected to be announced soon, with the process likely to conclude in the next 12-15 months.