Shares of Tata Motors surged 4% on Thursday, boosting investor sentiment as brokerage firms are bullish on the new Tiago EV. The stock was trading at Rs 408.75 at 10:09 am, up 2.4% on the BSE.

On Wednesday, Tata Motors launched the Tiago EV, an electric vehicle built from its popular hatchback Tiago, starting at Rs 8.49 lakh (ex-showroom) and the top-of-the-line model at Rs 11.79 lakh (ex-showroom). Nomura said the model had become India’s first electric premium hatchback offering.

The company will take pre-orders for the model from October 10 for Rs 21,000, and deliveries will start in January 2023.

“The Tiago EV overall is a very strong package of premium features and a very attractive price,” Nomura said.
The foreign brokerage expects the introductory pricing for the new model to appeal to a broader consumer base that may not see electric vehicles as a viable option. “In our view, this car has the potential to be the best-selling EV in India,” Nomura noted.

Meanwhile, Jefferies believes that Tata Motors has the potential to gain market share as EV adoption increases. In contrast, ICICI Direct Research believes the new launch will help the auto giant maintain its presence in the electric passenger vehicle segment.

ICICI Direct Research explained that the Tiago EV is the most affordable electric vehicle in the country, costing around Rs 3 lakh more than the internal combustion engine (ICE) powered Tiago, with a payback period of around three to five years. It added that in addition to the standard ICE variant, the Tiago EV includes some premium products such as leather seats, automatic folding ORM and more.

“Overall, we think the company has improved the energy density of this model by offering the greater range in a relatively small battery size,” the domestic brokerage said.

Jefferies has a “buy” rating on the auto stock with a price target of Rs 540, believing that the new Tiago EV offers an attractive proposition. Jefferies added that EVs now account for 8% of Tata Motors’ passenger vehicle sales in India.

“We maintain our view that every 1% gain in the passenger car market share has the potential to add Rs 5,000 crore to the company’s market capitalisation,” Nomura said while maintaining a “buy” recommendation on the stock with a target price of Rs 520.