JP Morgan has initiated coverage on shares of Tata Motors with an 'overweight' rating and a target price of Rs 630 which implies an upside of around 26 percent from Wednesday's closing price of Rs 498.20.

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The foreign brokerage house believes that the automaker can achieve its zero net debt target by FY24 against Rs 604 billion currently.

This would be possible due to the mix improvement and right-sizing of costs and investments in Jaguar Land Rover (JLR), market share gains in the Indian Passenger Vehicle (PV) segment and strengthening its commercial vehicle leadership during a cyclical recovery, according to JP Morgan.

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"Our potential bull case fair value of Rs 783 (57 percent upside) is predicated on EV leadership in Indian PVs and meeting medium-term targets at JLR," the brokerage house said in a note to clients.

JP Morgan highlighted that Tata Motors dominates (80 percent share) the nascent EV segment within Indian PVs.

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However, JP Morgan has pointed out a few risks:

Continued chip shortage could delay volume recovery and balance sheet deleveraging

Slower-than-expected recovery in Indian CVs and reversal of market share gains in PVs due to failure of new models

Higher-than-expected investments to meet electrification targets

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First Published:Feb 17, 2022 9:07 AM IST