Tata Motors (Commercial Vehicle) made a solid debut on Wednesday, listing at a 28% premium to its implied value as investors piled into the newly demerged truck and bus maker, betting on a fresh upcycle in India’s commercial vehicle sector.
The stock opened at Rs 335 on the NSE and Rs 330.25 on the BSE, well above its implied value of Rs 260.75, and later rose 3% to Rs 345 on the NSE – a strong vote of confidence in the standalone business of India’s largest commercial vehicle manufacturer.
1. Tata Motors split unlocks standalone value
TMCV’s debut comes after the long-awaited separation of Tata Motors’ passenger vehicle (PV) and commercial vehicle (CV) businesses. The demerger allows investors to value the two verticals independently.
“The demerger separates the fast-growing passenger vehicle and EV business from the more stable, cash-generating CV business, allowing investors to value each on its own strength,” said Jahol Prajapati, Research Analyst at SAMCO Securities.
2. One-for-one share allocation, no dilution
Shareholders of Tata Motors received one share of TMCV for every Tata Motors share held, with October 14 set as the record date.
“Shareholders will get one share of TMCV for every Tata Motors share held, so there’s no dilution of ownership,” Prajapati noted. Based on Tata Motors’ pre-demerger price of Rs 660.75 and the PV arm’s opening level near Rs 400, TMCV’s implied value stood around Rs 260–270 per share.
3. A strong listing out of the gate
Shares opened at Rs 335 on the NSE, up 28.5% from the implied value, and at Rs 330.25 on the BSE, a 26.6% premium. The stock gained further to Rs 345 on the NSE, reflecting robust investor appetite and optimism over India’s CV cycle recovery.
4. CV arm seen at the core of India’s growth story
Analysts described the CV business as “at the heart of India’s growth story, supporting logistics, mining, and infrastructure expansion.”
Prajapati said, “With freight activity improving, commodity costs easing, and the GST rate cut from 28% to 18%, demand for commercial vehicles is expected to rise sharply. Fleet replacement and new demand from construction and logistics players will add further momentum.”
5. Strong fundamentals and fair valuation
TMCV reported FY25 revenue of Rs 75,055 crore and EBITDA of Rs 8,856 crore, translating to an 11.8% margin.
“Using Ashok Leyland’s EV/EBITDA multiple of 12.9x, the fair value for TMCV comes around Rs 1.14 lakh crore, or roughly Rs 310–Rs 320 per share,” said Prajapati, adding that the listing “removes the ‘conglomerate discount’ and gives investors a focused bet on India’s commercial vehicle upcycle.”
6. Brokerages stay bullish; Iveco deal in focus
Brokerages, including Ambit Institutional Equities, called the CV arm “the near-term winner of the split.” Ambit said it represents “a separation of value and growth propositions,” noting that “the CV business is better positioned to capitalize on the demerger.”
SBI Securities pegged TMCV’s fair value between Rs 320–470, factoring in the company’s €3.8 billion acquisition of Italy’s Iveco Group NV’s commercial vehicle operations. Analysts said the Iveco deal “would transform Tata’s global presence” by adding scale and technology depth.
7. Investors eye long-term growth amid short-term volatility
Harshal Dasani, Business Head at INVasset PMS, described the debut as “a dual-edged opportunity.” “On the upside,” he said, “it’s a sharp, India-centric commercial vehicle play aligned with freight and logistics growth as well as infrastructure tailwinds. On the risk side, early-stage independent listing dynamics, margin cyclicality in CVs, and execution discipline will be under close scrutiny.”
Dasani added, “The debut of TMCV marks a milestone in India’s auto-capital cycle and merits inclusion in a medium-term portfolio with a 3–5-year horizon.” While he expects “some volatility as passive funds rebalance post demerger,” he believes “stronger GDP-linked demand, emission-driven upgrades, and export opportunities could gradually lift the stock’s trajectory once integration benefits and capacity leverage start to play out.”
Source Name : Economic Times