Tata Motors CV Share Price: Newly listed TMCV to offer 20% upside? Brokerage recommends BUY

TMCV Share Price: Shares of Tata Motors Commercial Vehicles Ltd (TMCV), the newly listed entity housing Tata Motors’ commercial vehicles business, traded lower in early trade on Tuesday.

The stock was priced at Rs 357.50, down 0.82 per cent from its previous close of Rs 360. Since its listing at Rs 335 per share, TMCV has traded at a premium of around 6.7 per cent over the issue price.

Pure Commercial Vehicle Play and Market Position

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TMCV now operates as a pure commercial vehicle (CV) play, with over 35 per cent retail volume share and 42 per cent revenue share in the Indian CV market. The company’s portfolio includes medium and heavy commercial vehicles (MHCV) and light commercial vehicles (LCV), while the passenger vehicle business, including EVs and Jaguar Land Rover, has been demerged into Tata Motors Passenger Vehicles Ltd.

According to Ambit Capital, TMCV offers a strong value proposition due to its profitability, pricing discipline, higher tonnage mix, and cost-efficiency measures, which are expected to support margin expansion in the coming years.

Despite a volume decline of approximately 5 per cent in FY19-25, India CV revenue and EBITDA grew at 6 per cent and 7 per cent CAGR, supported by high-margin, non-core revenue streams that help mitigate cyclical risks.

Growth, Margins, and Cash Flow

The brokerage expects TMCV revenue and EBITDA to grow 6 per cent and 8 per cent CAGR over FY25-28, with margins benefiting from a higher GVW mix, improved product portfolio, and operational efficiencies. Recent product upgrades, strengthened distribution networks, and the LCV recovery are seen as catalysts for volume and market share improvement.

TMCV’s free cash flow (FCF) and return on capital employed (RoCE) are projected to remain robust at around 8.5 per cent of sales and over 25 per cent, respectively, owing to tight working capital management, low capex requirements, and the absence of legacy overhang.

The company’s ongoing IVECO acquisition is expected to expand its total addressable market globally, leveraging TMCV’s cost-effective manufacturing and IVECO’s R&D and technology capabilities.

TMCV Share Price Target

Ambit Capital values TMCV using a sum-of-the-parts approach, with EV/EBITDA multiples of 13.5x for the Indian CV business and 2.5x for IVECO, along with listed subsidiaries and other investments adjustments.

The brokerage has initiated a BUY recommendation on TMCV, highlighting domestic CV recovery, global expansion opportunities, and anticipated margin improvements as key drivers for potential re-rating. It has set a 12-month target price of Rs 430, indicating an upside of around 20 per cent from the current market level.