Shares of Tata Motors Commercial Vehicles came under renewed buying in Tuesday’s trade, December 12, rising 3.60% to an intraday high of ₹373.20 per share after domestic brokerage firm Ambit Capital initiated coverage on the stock with a ‘Buy’ rating and set a target price of ₹430 per share, implying an upside potential of 21% from the latest closing price.
The brokerage’s optimistic view is driven by the company’s strong position in the Medium & Heavy Commercial Vehicle (M&HCV) segment, its efforts to address challenges in the Commercial Vehicles (CV) business through recent operational interventions, and its focus on fiscal discipline, which has translated into improved profitability.
Ambit also highlighted that higher consumption following GST cuts could drive a rebound in freight demand, with a recovery in volumes expected from the second half of FY26 onwards.
The brokerage pointed out that the IVECO–TMCV combination significantly expands the company’s total addressable market (TAM) to over ₹2 trillion in potential revenue. This strategic move is expected to support revenue diversification and unlock possible synergies of up to 0.5% of combined revenues over time.
Historically, Ashok Leyland was the only listed OEM player in the commercial vehicle space. The listing of TMCV has broadened the investment universe. Despite relatively weaker volume growth, Ambit stated that TMCV has outperformed Ashok Leyland on key financial metrics, delivering superior revenue CAGR (7.7% vs 5.7%) and EBITDA CAGR (8.6% vs 7.5%) over FY18–FY25.
Despite these strong structural tailwinds, the brokerage noted that the stock continues to trade at reasonable valuations of around 12.6x FY27E EV/EBITDA and at a discount of roughly 6% to Ashok Leyland over the same period.
Ambit added that while valuation positives such as the CV cycle recovery tailwinds, IVECO integration, improved pricing discipline, lower capex intensity and strict capital allocation remain supportive, these could be partly offset by risks such as a rising share of rail-led freight under the Dedicated Freight Corridor (DFCC) and higher competitive intensity.
Overall, the brokerage reiterated that TMCV’s strong presence in the M&HCV segment, improving execution in the LCV business, sharp focus on fiscal discipline and a clean net-cash balance sheet position it well for sustained long-term growth.
IVECO acquisition positions Tata Motors as global CV powerhouse
According to the brokerage, Tata Motors’ acquisition of IVECO is expected to be value-accretive, expanding total addressable market (TAM), enhancing geographic diversification, leveraging LATAM exports, and strengthening powertrain technology.
While truck demand remains soft, buses show double-digit growth in CY25 with strong order visibility into 2H26. EV momentum focuses on buses, eAxles, and batteries, while powertrain gains from leaner costs and operational efficiencies.
Early signs of recovery in 3QCY25 include improved book-to-bill ratios and declining inventory, particularly in EU LCVs, though LATAM lags, it added.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
