Tata Motors Rallies 3.5% As Ambit Capital Starts Coverage With ‘Buy’, Projects 20% Upside

TMCV Share Price: Shares of Tata Motors Commercial Vehicles (TMCV) surged 3.60% on Tuesday, December 12, hitting an intraday high of Rs 373.20, after domestic brokerage Ambit Capital initiated coverage with a ‘Buy’ rating and set a target price of Rs 430, implying a 21% upside from the previous close.

Ambit’s bullish stance is anchored in TMCV’s strong leadership in the Medium & Heavy Commercial Vehicle (M&HCV) segment, ongoing operational interventions aimed at resolving challenges in the broader Commercial Vehicles (CV) business, and sustained fiscal discipline that has contributed to improved profitability.

The brokerage added that GST-led consumption gains could spur a recovery in freight demand, with volume growth expected to pick up from

the second half of FY26.

One of the key positives highlighted by Ambit is that the IVECO–TMCV combination significantly expands the company’s total addressable market (TAM) to over Rs 2 trillion in potential revenue. The integration is also expected to enhance revenue diversification and generate synergies of up to 0.5% of combined revenues over time.

Ambit noted that historically Ashok Leyland was the only listed OEM in the commercial vehicle space, but the listing of TMCV has broadened the investable universe. Despite slower volume growth, TMCV has outperformed Ashok Leyland on major financial metrics—posting superior revenue CAGR (7.7% vs 5.7%) and EBITDA CAGR (8.6% vs 7.5%) over FY18–FY25.

Even with these structural strengths, the stock still trades at reasonable valuations of around 12.6x FY27E EV/EBITDA, at a 6% discount to Ashok Leyland.

Ambit added that while several valuation levers—CV cycle recovery, IVECO integration, improved pricing discipline, lower capex needs and tighter capital allocation—remain supportive, risks persist. These include a potential rise in rail-led freight due to the Dedicated Freight Corridor (DFCC) and intensifying competition.

Overall, Ambit reiterated that TMCV’s strong M&HCV franchise, better execution in the LCV business, disciplined financial strategy and net-cash balance sheet provide a solid foundation for sustained long-term growth.

IVECO Deal Seen as Transformational for Tata Motors

According to Ambit, Tata Motors’ acquisition of IVECO is expected to be value-accretive, broadening its global TAM, increasing geographic reach, boosting LATAM export potential, and enhancing powertrain technology capabilities.

While truck demand remains subdued, the brokerage expects double-digit growth in buses in CY25, with strong order visibility into the second half of 2026. Growth areas include electric buses, e-Axles and battery systems, supported by cost efficiencies in powertrain operations.

Ambit also pointed to early recovery signals in 3QCY25, including an improving book-to-bill ratio and easing inventory levels, particularly in EU LCVs, though the LATAM region continues to lag.