Tata Motors CV shares get another bullish call; Nomura sees 20% upside

Shares of Tata Motors Commercial Vehicles will be in focus on Monday, December 22, after the stock received another initiation of coverage from a global brokerage.

Nomura has initiated coverage on Tata Motors CV with a 'Buy' rating and a price target of ₹481, implying an upside of about 20% from current levels, following the company's recent demerger.

The brokerage expects the India business to benefit from an anticipated upcycle, led by Tata Motors CV's dominant 46% market share in the domestic medium and heavy commercial vehicle segment in FY25.

Nomura estimates volume growth of 10% in FY26 and FY27, and 5% in FY28, with EBITDA margins expanding to 12% to 13% over FY26 to FY28.

However, Nomura said that the recently acquired Iveco trucks business, bought for €3.8 billion, is currently going through a downcycle and is likely to see a recovery only from FY27 onwards.

For valuation, Nomura has assigned a 12x EV to EBITDA multiple to the core CV business and a 4x EV to EBIT multiple to Iveco, at the lower end of the peer trading range of 4x to 10x, citing its smaller scale and lower margin profile.

Over the medium term, the brokerage sees scope for higher value accretion from Iveco due to potential synergies with Tata Motors CV's India operations across the supply chain, product development, and new market opportunities.

Last week, the stock also received positive recommendations from BofA Securities and JPMorgan, on expectations that the commercial vehicle cycle is nearing a bottom in both India and the European Union.

BofA Securities initiated coverage with a 'Buy' rating and a price target of ₹475, calling Tata Motors CV a proxy play on the expected recovery in the truck cycle across India and the EU.

The brokerage mentioned steady market share, margin discipline, a 35% return on capital employed even during a downcycle, and lower regulatory risk as key drivers for a potential re rating.

JPMorgan also initiated coverage with an 'Overweight' rating and a price target of ₹475, citing expectations of a modest recovery in the CV cycle after three years of stagnation.

Currently, 13 out of 16 analysts tracking Tata Motors Commercial Vehicles have a 'Buy' rating, while two recommend 'Hold' and one has a 'Sell' rating.

Shares of Tata Motors Commercial Vehicles closed 2.08% lower on Friday at ₹392.70. The stock has gained 19% so far in 2025.