Nomura splits Tata Motors' post-demerger targets between PV and CV biz

Nomura has apportioned Tata Motors’ post-demerger valuation almost equally between its Passenger Vehicle (PV) and Commercial Vehicle (CV) businesses. Following the demerger effective 1 October 2025, the brokerage set a target price of ₹367 per share for the PV entity and ₹365 per share for the CV entity.   Tata Motors' shares were in focus on its record date for demerge (October 14, 2025). Meanwhile, reports suggested that a special session was underway to discuss CV price discovery.  At 10:21 AM, Tata Motors' PV business shares were trading 1.17 per cent lower at ₹394.35 per share. In comparison, BSE Sensex was down 0.3 per cent at 82,083.88. 

 

Tata Motors demerger details

PV entity: Tata Motors’ domestic PV business, Jaguar Land Rover (JLR), stakes in Tata Sons (unlisted), Tata Steel and Tata Technologies, along with other investments.

 

CV entity: Domestic CV business, the Iveco business (acquisition slated to complete in 2026), and a stake in Tata Capital. 

PV outlook: Demand tailwinds and premiumisation

Nomura expects momentum in the PV business to strengthen following the Goods and Services Tax (GST) cut that came into effect on September 22, 2025, supported by festive and pent-up demand. Premiumisation remains a key theme, with robust bookings for compact and micro SUVs such as Punch and Nexon. The newly unveiled Harrier electric vehicle (EV) has also drawn an encouraging initial response, with bookings surpassing early expectations.

 

Management is targeting double-digit Earnings before interest, tax, depreciation and amortisation (Ebitda) margins in the medium term (from 3.9 per cent in Q1 FY26), driven by richer mix, improved pricing and cost efficiencies.

JLR: Operations normalising post cyber incident

JLR’s operations are resuming across facilities following the cyber incident in September. Management indicated no significant demand impact, and production is expected to pick up in the coming weeks. Nomura estimates FY26F/FY27F Earnings before interest and tax (Ebit) margins at 6.2 per cent/7.6 per cent, versus management guidance of 5–7 per cent Ebit in FY26E and zero free cash flow (FCF), the latter carrying some downside risk.

CV outlook: Modest growth; Iveco integration ahead

For CVs, management expects industry growth of around 5 per cent in FY26F (implying circa 10 per cent growth in H2 FY26) aided by GST reduction. The CV entity will include the Iveco acquisition from April 2026, financed initially with €3.8 billion of debt and later 40 per cent equity. Nomura does not yet factor in significant value creation from this deal. The company guides to a 5 per cent revenue compound annual growth rate (CAGR) and Ebit margin improvement from 5.4 per cent to 7.5 per cent over 2024–28E. Iveco’s H1 CY25 results show a year-on-year revenue decline of 9 per cent and Ebit margins ex-Defence of 3.7 per cent (vs 6.3 per cent in H1 CY24).