HSBC has upgraded its rating on Tata Motors to ‘Buy’, with a revised target price of Rs 930 per share to Rs 840. The brokerage sees several tailwinds that could drive margin expansion and support a potential re-rating of the stock.

A key factor in HSBC’s optimistic outlook is Jaguar Land Rover (JLR), the luxury vehicle subsidiary of Tata Motors. Its note mentioned that a reduction in discounts and warranty costs at JLR is likely to drive profitability, as the company improves its pricing power and operational efficiency. Additionally, JLR achieving its Q4 guidance could act as a re-rating trigger, helping the stock regain investor confidence.

Beyond JLR, Tata Motors‘ domestic business is also showing signs of improvement. HSBC has pointed to a rise in small commercial vehicle (SCV) sales, indicating a surge in demand in the logistics and transportation sectors. Meanwhile, the passenger vehicle (PV) division is expected to strengthen its market position with upcoming new model launches, which could help sustain the company’s growth momentum in the highly competitive Indian automobile market.

Despite some valuation compression in the last 2-3 quarters, Tata Motors now appears attractively priced. The stock’s EV/EBITDA for FY26 is 1.8x, which HSBC states is at the lower end of its historical trading range. Given the improving fundamentals, the brokerage believes that the current valuation looks reasonable, offering potential upside for investors.

With multiple growth catalysts including JLR’s improving margins, expansion in the domestic market, and new product launches, Tata Motors could be set for a strong performance in the coming quarters. HSBC’s revised outlook suggests that the recent correction in the stock presents an attractive buying opportunity.