Tata Motors CV shares fall 3% even after strong Q3, management commentary

Shares of Tata Motors' commercial vehicle (CV) business are trading 3% lower on Friday, January 30, even after the company reported a healthy set of December quarter results post market hours on Thursday.

The third quarter numbers were aided by strong volume growth and sustained margin performance. The CV segment delivered a solid Q3, with robust demand pushing volumes higher and lifting revenues. The business also maintained double-digit margins for the 10th consecutive quarter.

On a year-on-year basis, revenue rose 17% to ₹21,533 crore in Q3FY26, compared with ₹18,478 crore in the year-ago period.

EBITDA margin improved to 12.7% from 12.4%, while EBIT margin expanded sharply to 10.6% from 9.6%.

Free cash flow surged to ₹4,752 crore during the quarter, up from ₹1,479 crore a year ago, even as the impact of the new labour code stood at ₹603 crore.

Total CV volumes grew 20% YoY, driven by an 18% rise in domestic volumes and a sharp 70% jump in exports.

Domestic CV market share also improved sequentially, rising 100 basis points QoQ to 35.5%.

Looking ahead, the company expects demand to strengthen further in Q4FY26 across most commercial vehicle segments.

The outlook remains supported by the government's continued infrastructure push, with Tata Motors indicating it is well positioned to sustain momentum and drive growth.

Brokerage firm Nomura has maintained a 'Buy' rating on Tata Motors' CV business, with a price target of ₹547.

The brokerage said that average selling prices in the December quarter missed expectations due to an adverse product mix. However, it said recent price hikes should help offset cost pressures, while the overall growth outlook for the CV segment remains strong.

Nomura flagged some risks to its view, including the possibility of a slower economic recovery, which could weigh on freight rates amid higher supply. It also referred to the risk of IVECO turning free cash flow negative.

Shares of Tata Motors ended Thursday's session 0.45% higher at ₹470.20.