Nomura Starts Coverage on Tata Motors CV with Buy Rating and Rs 471 Target Price
Nomura initiates 'buy' on Tata Motors CV with Rs 471 target, citing attractive valuations and CV upcycle benefits.
Global brokerage firm Nomura has initiated coverage on Tata Motors Commercial Vehicles (TMCV), describing it as a prime beneficiary of the upcoming upcycle in India’s commercial vehicle (CV) industry. The brokerage highlighted that current valuations remain attractive, offering a compelling entry point for investors. According to Nomura, improving demand fundamentals and structural strengths position TMCV for sustained growth over the medium term.
Nomura underscored Tata Motors CV’s dominant leadership in the domestic market. The company commands a strong 45% market share in the medium and heavy commercial vehicle (MHCV) segment and a 31% share in light commercial vehicles (LCVs) in FY25. This scale advantage, combined with a broad product portfolio, gives TMCV a significant competitive edge across key sub-segments.
The brokerage expects the CV cycle to turn favorable over the next two years. Nomura projects wholesale volumes for MHCVs to grow by around 10% each in FY26 and FY27, supported by infrastructure spending, replacement demand, and economic recovery. It added that Tata Motors CV is well-positioned to capture this growth due to its strong distribution network and execution capabilities.
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Nomura also highlighted consistent improvements in profitability driven by the company’s focus on disciplined and profitable growth. It expects Ebitda margins to expand from 11.6% in FY25 to 13.6% by FY28. This margin expansion is likely to be driven by operating leverage, pricing power, and benefits arising from recent GST rate rationalisation.
A major long-term growth catalyst identified by Nomura is Tata Motors CV’s planned acquisition of Italian OEM IVECO’s commercial vehicle business for €3.8 billion. The transaction, expected to be completed by April 2026, could transform TMCV into the world’s fourth-largest truck manufacturer by volume. The acquisition is seen as strategically important for global scale and technology access.
Based on a Sum-of-the-Parts valuation approach, Nomura values the domestic business at 12x FY28F EV/Ebitda and the IVECO business at 4x CY27E EV/EBIT. The brokerage believes these assumptions justify a ‘Buy’ rating with a target price of ₹471. This implies a potential upside of about 22% from the stock’s recent closing price of ₹394.
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