Tata Motors CV shares still have more upside in store; UBS says 'buy'

Brokerage firm UBS is positive on commercial vehicle makers as it has initiated coverage on Tata Motors Ltd. and raised its target price on Ashok Leyland Ltd.

UBS has initiated a "buy" rating on Tata Motor CV with a price target of ₹550 per share, implying a potential upside of 23.65% from its previous close. It has a "buy" rating on Ashok Leyland as well and has raised its price target by 92.3% to ₹225 from ₹117, indicating a potential upside of 16.4% from its previous close.

UBS believes that investors may be overlooking the structural strengths of the commercial vehicle sector compared to two-wheelers and cars.

Globally, commercial vehicle stocks command premium valuations due to consolidation, healthy cash flows and lower technological or regulatory risks, it said.

While these factors are present in India, UBS is of the view that commercial vehicle stocks still trade at a discount, largely because of past concerns regarding volume and margin volatility.

However, since the financial year 2024, the sector has witnessed more stable volumes, higher margins and reduced volatility, which should help narrow the valuation gap with segments facing high disruption and competition, UBS said.

Tata Motors CV

UBS said it expects India's commercial vehicles industry to outperform passenger car and two-wheeler segments, in terms of profitability and free cash flow over the next two to three years.

Its view is that Tata Motors' commercial vehicles business is now well-placed to deploy its strong free cash flow towards the improving CV cycle, with the demerger freeing meaningful capital for reinvestment and supporting a potential resurgence in market share.

The homegrown auto major's demerger came into effect from October 1, 2025, after approval from the National Company Law Tribunal, Mumbai Bench, via orders dated August 25 and September 10, 2025.

Under the arrangement, the commercial vehicles business undertaking of Tata Motors was demerged into TMLCV, while Tata Motors Passenger Vehicles Ltd was amalgamated with Tata Motors Ltd. The appointed date for the scheme was July 1, 2025.

Tata Motors Ltd. continues to trade as a listed entity by housing the Commercial Vehicles business, while the PV business trades as a separate listed entity under Tata Motors Passenger Vehicles Ltd., which comprises of EVs and the JLR business.

The CV entity stock is up around 40% post-listing, but UBS sees further upside.

Analyst views and stock performance

Here's a look at the analyst views on Tata Motors Ltd

. and Ashok Leyland.

Company	Buy	Hold	Sell
Tata Motors CV	17	3	0
Ashok Leyland	33	9	3

Shares of Tata Motors Ltd. ended the previous session 4.4% lower at ₹444.8 apiece, while Ashok Leyland shares ended 0.1% up at ₹193.25 apiece.

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