Tata Motors may struggle on growth, synergy fronts with Iveco buy

The company is raising 3.8 billion euros to fund the acquisition with about a third of the same being funded by equity and the company will raise debt for the rest

The  stock of Tata Motors is down about 4 per cent over the last two trading sessions on concerns related to the $4.35 billion (₹38,000 crore) acquisition of Italian commercial vehicle (CV) major Iveco. The Street is worried about the sluggish growth outlook for CVs in Europe, increase in debt for the consolidated entity, the higher cost of operations at the European plant and lack of synergies. The valuation of the deal is, however, reasonable at 2 times enterprise value to operating profit on CY24 figures. 

Tata Motors says that the acquisition combines a large product and engine portfolio, diversifies