Shares of Tata Motors (Commercial Vehicle) made a strong market debut on Wednesday, listing at a 28% premium to its implied value, as investors cheered the standalone listing of India’s largest truck and bus maker amid optimism about a cyclical upturn in the commercial vehicle sector.
TMCV shares opened at Rs 335 on the NSE, up 28.5% from the implied value of Rs 260.75, and at Rs 330.25 on the BSE, a 26.6% gain, reflecting solid investor appetite even as analysts expect near-term volatility.
Post-listing, the stock rose another 3% from its opening price to Rs 345 on the NSE, reflecting investor enthusiasm for the newly demerged business.
Jahol Prajapati, Research Analyst at SAMCO Securities, said 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.” He added that “shareholders will get one share of TMCV for every Tata Motors share held, so there’s no dilution of ownership.”
“The CV arm is at the heart of India’s growth story – supporting logistics, mining, and infrastructure expansion,” Prajapati noted. “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.”
On the financial front, TMCV reported FY25 revenue of Rs 75,055 crore and EBITDA of Rs 8,856 crore, implying an 11.8% margin. According to Prajapati, “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.”
Summing up, Prajapati said, “The listing removes the ‘conglomerate discount’ and gives investors a focused bet on India’s commercial vehicle upcycle — a steady, cash-rich, value-driven play backed by improving policy and economic tailwinds.”
Meanwhile, Harshal Dasani, Business Head at INVasset PMS, said, “For investors, this listing presents a dual-edged opportunity: on the upside, a sharp, India-centric commercial vehicle play aligned with freight and logistics growth and infrastructure tailwinds; on the risk side, early-stage independent listing dynamics, margin cyclicality in CVs, and execution discipline will be under close scrutiny.”
“On balance, the debut of TMCV marks a milestone for India’s auto-capital cycle and deserves attention in a medium-term portfolio with a three-to-five-year horizon,” Dasani added.
Brokerages bullish on TMCV arm
Brokerages including Ambit Institutional Equities see the commercial vehicle business as the near-term winner of the split. Ambit termed the move “a separation of value and growth propositions,” adding that “the CV business is better positioned to capitalize on the demerger” given its market leadership and steady cash generation. The brokerage expects “immediate value unlocking for CV,” with TMPV’s residual value likely to settle around Rs 380.
SBI Securities had earlier estimated TMCV’s fair value between Rs 320 and Rs 470, factoring in the company’s ongoing acquisition of Italy’s Iveco Group NV’s commercial vehicle operations for €3.8 billion — a deal analysts believe could transform Tata’s global presence.
Iveco acquisition seen as transformative
Analysts view Tata Motors’ pending acquisition of Italy’s Iveco Group NV’s commercial vehicle operations for €3.8 billion as a potential game changer.
Dasani noted that “the Iveco acquisition plan adds technological heft but will take time to reflect in earnings,” describing it as a long-term strategic catalyst that could position TMCV as a global contender in the medium and heavy commercial vehicle segment.
For now, the listing will test investor sentiment on the demerged entity’s standalone financial strength and execution capability. Dasani expects “some volatility as passive funds rebalance post demerger,” but believes that “over the medium term, stronger GDP-linked demand, emission-led 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