Tata Motors CV shares get a 'buy' rating from two analysts based on four key factors

Tata Motors Ltd

. the Commercial Vehicles entity of Tata Motors has received two positive recommendations from analysts, on hopes that the CV cycle is close to a bottom both in India, and the European Union.

Brokerage firm BofA Securities initiated coverage on the stock with a "buy" rating and a price target of ₹475, which implies a potential upside of 23% from current levels.

BofA believes that Tata Motors CV is a proxy play on the truck cycle in India and EU, which is poised for a rebound ahead.

A combination of steady market share, margin discipline, a 35% Return on Capital Employed (RoCE) even during a downcycle, and a lower regulatory risk, are some key factors that will drive a potential re-rating for the CV stock, according to the BofA note.

The brokerage said that the Inveco deal will yield to the equity value accretion and balance sheet deleveraging will also keep the stock in good stead.

Additionally, JPMorgan also initiated coverage on Tata Motors CV with an "overweight" rating and a price target of ₹475, the same as BofA.

JPMorgan is positive on the stock due to expectations of a modest recovery in the CV cycle after three years of no growth.

Pricing discipline by large players like Tata Motors CV and Ashok Leyland, which has led to RoCE expansion despite weak demand, a margin accretive Inveco acquisition, and the EU truck cycle bottoming, are some other factors behind JPMorgan's bullish stance.

The brokerage sees Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) to grow at a Compounded Annual Growth Rate (CAGR) of 13% over financial year 2026-2028, which will lead to cash low generation of $162 billion.

15 analysts have coverage on Tata Motors CV, of which 12 have a "buy" rating, two say "hold", and one has a "sell" rating.

Shares of Tata Motors Commercial Vehicles are trading 1.1% higher in early trading on Thursday.