Tata Motors CV set for growth, says Nomura; starts coverage with 'Buy'

Global brokerage firm Nomura has initiated coverage on Tata Motors (TMCV) with a Buy rating, highlighting the company's strong positioning to capitalise on the anticipated upcycle in India’s medium and heavy commercial vehicle (M&HCV) sector.  The brokerage has set a target price of ₹481, suggesting a potential upside of 20  per cent from current levels.

India M&HCV industry poised for upcycle

Nomura believes the India M&HCV industry is entering its next upcycle, with volumes expected to grow 8  per cent and 10  per cent year-on-year in FY26F and FY27F, respectively, following a period of modest growth. Rising freight rates, lower GST-induced affordability, and the high average age of trucks (around 10 years) are likely to drive replacement demand in FY27-28F.

 

 

“TMCV’s India business is likely to benefit from the expected upcycle, given its dominant market share of 46  per cent in the domestic M&HCV industry in FY25,” the brokerage said.  ALSO READ | Analysts see MUFG's 20% stake buy as game-changer for Shriram Finance

TMCV well-positioned amid global rxposure

Nomura believes Tata Motors' commercial vehicle (TMCV) division is positioned to benefit despite its high overseas exposure, as the acquisition of IVECO’s CV business is expected to be value accretive. The brokerage expects volume growth of 10  per cent, 10  per cent, and 5  per cent year-on-year in FY26-28F, with Ebitda margins expanding to 12-13  per cent over the same period.

 

The brokerage further highlighted that TMCV’s recent acquisition of IVECO’s truck business for EUR 3.8 billion is passing through a downcycle, with growth expected to recover from FY27F.

 

Valuing TMCV on a sum-of-the-parts (SOTP) basis, Nomura assigned a 12x EV/Ebitda multiple for its CV business and a 4x EV/Ebit multiple for IVECO, the lower end of peer multiples (4-10x), reflecting IVECO’s smaller scale and lower margins. Over the medium term, Nomura sees potential for higher value accretion in IVECO due to synergies with TMCV’s India business across supply chain, product development, and new market opportunities.

 

“Our EPS estimates for TMCV are well ahead of consensus by 12  per cent/11  per cent for FY27F/FY28F,” the report added. 

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