Tata Motors rallies 15% as TPG’s billion dollars spark a series of upgrades for the stock

• Shares of Tata Motors rallied 15% as private equity firm TPG’s Rise Climate Fund has committed to invest ₹7,500 crore (around $1 billion at current prices) in the company’s EV business.
• The development has turned analysts positive on the company’s EV dreams as they believe Tata Motors’ volumes will surge in the near term due to lack of competition.
• The automaker aims to create a portfolio of 10 electric vehicles in the next five years.

Shares of Tata Motors stole the limelight on Wednesday as it rallied 15% as analysts turned bullish on the company’s electric vehicle (EV) business after it announced a billion dollar investment by a private equity firm on Tuesday.

Private equity firm TPG’s Rise Climate Fund along with Abu Dhabi Development Holding will make an investment worth ₹7500 crore (around $1 billion at current prices) in Tata Motors’ electric vehicles (EV) segment, it had said.

Analysts believe the development will turn fortunes for the company reeling from its Jaguar Land Rover business.

“Lack of competition in the near term may continue to benefit Tata’s EV volumes though progress has to be tracked,” said analysts at HSBC while raising the target price for the stock to ₹550.

At 9:36 a.m., on Wednesday, shares of the company were trading nearly 15% higher at ₹483.

Meanwhile, Kotak Institutional Equities and Nomura upgraded their rating for the stock to “BUY”.

“We believe the domestic EV business can be the game changer for the company given strong government push amid favorable policies and growing consumer demand for greener solutions,” said a report by Kotak Institutional Equities.

Tata Motors’ domestic passenger vehicle business currently has 71% market share in the EV segment with revenues of around ₹5-6 billion as of FY2021, according to Kotak’s report.

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