Shares of Tata Motors have been on an upward swing, gaining more than 3.45% on Thursday, marking a surge of about 8.7% in over just two trading days driven by investor optimism surrounding global trade developments.
Analysts and market experts believe Tata Motors is well-positioned to benefit from the recently concluded Free Trade Agreement (FTA) between India and the UK, which includes significant tariff reductions for high-end vehicles imported under quota.
The announcement of the agreement by Prime Minister Narendra Modi has sparked interest in related stocks, especially companies with a large UK footprint like Tata Motors.
At the same time, a report by The New York Times that the US is expected to announce a trade pact with the UK later in the day, has also added to investor cheer due to positive implications on Jaguar Land Rover which gets 25% of its total sales from the US market.
Ind-UK FTA to see JLR’s price in India fall
The FTA between India and UK reduces tariffs on imported automobiles from 100% to 10%, under specific quotas.
This change is seen as a direct positive for Tata Motors’ UK-based subsidiary, Jaguar Land Rover (JLR), whose premium car lineup includes the widely known Range Rover series.
The lower tariffs could help boost JLR’s India-bound shipments, including electric vehicle models planned for export from the UK.
Jefferies, in a recent note, projected that JLR prices could fall by 6% to 20% in India as a result of the agreement.
The firm also identified Indian textiles, luxury carmakers, and premium liquor brands as key beneficiaries of the pact.
Analyst Mitesh Panchal, a Sebi-registered investment advisor, told Business Today “Tata Motors will be a clear beneficiary of the FTA agreement. Investors should accumulate in the Rs 680-700 range, with short-term targets of Rs 780-820.”
Rajesh Sinha of Bonanza added that the agreement could bolster both strategic and economic ties between India and the UK and pointed to JLR’s plans to establish a new manufacturing facility in Tamil Nadu as part of its long-term strategy.
US-UK trade deal speculation adds to investor cheer
Separately, a report by The New York Times suggested that a US-UK trade deal may also be in the works.
Former US President Donald Trump hinted on Truth Social that a major trade pact involving a “highly respected country” would be announced shortly.
Although unnamed, market participants speculated that the country was the UK.
The potential implications for JLR are significant.
The automaker derives about 25% of its total sales from the US market.
In April, JLR briefly paused vehicle shipments to the United States following a 25% tariff on all auto imports.
Reports now indicate that shipments have resumed, though no official confirmation has been made.
Demerger plan adds further momentum to stock
Adding to the positive sentiment, Tata Motors recently secured shareholder approval for a major internal restructuring on Wednesday.
The company plans to split its commercial and passenger vehicle businesses into two separate publicly listed entities.
The decision, which received near-unanimous support, is expected to improve operational focus and unlock shareholder value.
Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, said the stock remains attractive from a medium- to long-term perspective.
“Those holding should continue with their positions and accumulate on dips,” he advised.
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