Tata Motors CV Shares Surge 3% After ICICI Direct Eyes 16% Upside: Check Target Price | R Business Stock Update

The share price of Tata Motors Commercial Vehicles (TMCV) rose as much as 3% to hit an intra-day high of Rs 445.50 apiece on Friday, January 16, 2025, after ICICI Direct's bullish call on the backs of strong profitability, and 37% market share in overall CV space.

The brokerages firm noted, "Post demerger TMCV is supported by structurally improved profitability,
strong FCF & superior ROCE profile. Leadership in MHCV space & demand tailwinds further strengthen the investment case with incremental upside from exports. We assign BUY rating on the stock and value it at ₹ 500 on SOTP basis (13x EV/EBITDA on FY28E, 1x P/B on long term investments)."

Currently, TMCV boasts of "37% in overall CV space, ~49% in Heavy CV domain, 37.6% in Passenger (Bus) segment, ~30% in lights good vehicles."

Why Invest In Tata Motors CV?

1. The demerger of the Commercial Vehicle (CV) business into a standalone listed entity allows investors to directly participate in India’s CV cycle without the earnings volatility and capital allocation complexity arising from the PV and JLR businesses.
2. In Q2FY26, the CV business delivered double-digit EBITDA margins of 12.2%, EBIT margins of ~9.8%, and a robust ROCE of ~45%, underscoring the structural improvement in earnings quality versus prior cycles.
3. Management commentary indicates a clear structural shift in CV business, with higher scale, disciplined capex (2–4% of revenues), and growing contribution from non-cyclical and high- ROCE businesses such as parts, services, digital platforms & fleet solutions.
4. As India’s market leader in Medium & Heavy Commercial Vehicles (MHCV), Tata Motors is a direct beneficiary of sustained infrastructure spending, mining activity, and road-led logistics growth.
5. Industry tailwinds such as rise in freight rates, better fleet profitability, scrappage policy and high fleet age led replacement demand bode well for Tata Motors amidst its target to regain ~40% market share and expanding margins into the teens.

Also Read: How Tiger Global’s India Exit Structure Led to a ₹14,000 Crore Tax Claim

Tata Motor's Iveco Acquisition Move: What Does This Signal?

Recently, Tata Motors announced the acquisition of 100% stake in a CV manufacturer based out of Italy i.e. Iveco excluding its defense business for an all-cash offer at Rs 38,000 crore.

"Tata motors CV + Iveco group will form the 4th largest CV player globally in volume terms, bringing it close to the top 3 players," noted ICICI Direct, while the management is of the opinion that this acquisition provides them with technology niche and geographical as well as portfolio diversification.

Iveco is a significant player in the CV domain and is present across the drivetrain technology namely diesel, CNG, electric etc. and has offerings across LCVs to M&HCVs included buses.

"The acquisition is being executed at a valuation of ~0.3x P/S & ~2x EV/EBITDA, which we believe is fair given the portfolio & geography diversification. It is guiding for EPS breakeven in 2 years and repayment of acquisition debt in 4 years. It will be initially funded through bridge loan and then termed out with a mix of Equity and long-term debt. It is expected to be closed by April 2026," it said.

As of 12:55 PM, the share price of Tata Motors CV rose as much as 2.51% to Rs 444.55 apiece. 

Disclaimer: The views or investment tips expressed by the brokerage in this article are their own and not those of the website or its management. Republic Media Network advises users to consult with certified experts before taking any investment decisions.