Nomura has initiated coverage on Tata Motors CV with a ‘Buy’ rating and a price target of ₹481, indicating an upside of about 20% from current levels after the company’s recent demerger.
The brokerage expects the Indian business to benefit from the anticipated upcycle due to Tata Motors CV’s dominant 46% market share in the domestic medium and heavy commercial vehicle segment in FY2025.
Nomura estimates volume growth to be 10% in FY26 and FY27 and 5% in FY28, with EBITDA margins expanding to 12% to 13% from FY26 to FY28.
However, Nomura said the recently acquired Iveco trucks business, which was bought for €3.8 billion, is currently in a recession and is likely to see a recovery only after FY27.
As for valuation, Nomura has assigned an EBITDA multiple of 12x EV to the core CV business and an EBIT multiple of 4x EV to Iveco, at the lower end of the peer trading range of 4x to 10x, citing their small scale and low margin profile.
In the medium term, the brokerage sees scope for higher value accretion from IVECO due to potential synergy with Tata Motors CV’s India operations in supply chain, product development and new market opportunities.
Last week, the stock also received positive recommendations from BofA Securities and JP Morgan on expectations that the commercial vehicle cycle is nearing bottom in both India and the EU.
BofA Securities initiated coverage with ‘Buy’ rating and price target of ₹475, calling Tata Motors CV a proxy play on expected recovery in truck cycle in India and EU.
The brokerage cited stable market share, margin discipline, 35% return on capital employed even during the downturn and low regulatory risk as key drivers for a possible re-rating.
JPMorgan also initiated coverage with an ‘overweight’ rating and a price target of ₹475, citing expectations of a modest improvement in the CV cycle after a three-year stagnation.
Currently, 13 out of 16 analysts tracking Tata Motors’ commercial vehicles have a ‘buy’ rating, while two advise ‘hold’ and one advises ‘sell’.
Shares of Tata Motors Commercial Vehicles closed 2.08% lower at ₹392.70 on Friday. The stock is up 19% so far in 2025.