Tata Motors CV Stock Sinks as Brokers Clash: Will Recovery Be Slow?

Author

Aditi Singh | Whalesbook News Team

Detailed Coverage:

Tata Motors CV (TMCV) saw its share price under pressure, opening almost 3 per cent lower on Friday, trading around 1 per cent down at Rs 317. This weakness is driven by divergent opinions from financial analysts.

Nomura highlighted strong operational performance, with TMCV's CV business revenue rising to Rs 18,040 crore and EBITDA margin improving to 12.2 per cent in the September quarter. The brokerage also noted positive free cash flow and anticipated demand improvement, partly due to GST rate cuts. Nomura expects single-digit volume growth in the second half of the fiscal year but remains cautious on broader industry growth, estimating domestic MHCV growth at 3 per cent for FY26-28. Their rating remained unchanged due to the modest growth profile.

In contrast, Nuvama maintained a 'Reduce' rating with a target price of Rs 300. Despite reporting higher standalone revenue and improved EBITDA margins (12.3 per cent), Nuvama projects a significant slowdown in domestic MHCV volume growth, forecasting only a 1 per cent CAGR between FY25 and FY28, down from 20 per cent previously. A key concern for Nuvama is the substantial market share loss across Light Commercial Vehicle (LCV) goods, Medium and Heavy Commercial Vehicle (MHCV) goods, and MHCV bus segments.

Motilal Oswal kept a 'Neutral' rating with a target price of Rs 341. They observed margin improvement and a rise in adjusted profit, despite an exceptional loss on Tata Capital. While acknowledging better industry pricing discipline, Motilal Oswal echoed concerns about TMCV's structural market share losses and added uncertainty regarding the upcoming Iveco acquisition, which could impact consolidated performance.

Impact: The conflicting views from major brokerages create investor uncertainty. Positive performance in margins and cash flow is countered by significant concerns over future volume growth and market share erosion. This divergence may lead to continued stock price volatility as investors weigh short-term operational gains against long-term structural challenges and industry competition. Rating: 6/10

Difficult Terms: * GST: Goods and Services Tax, a unified indirect tax in India. * EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization, a measure of a company's operating profit. * FCF: Free Cash Flow, cash generated after operational and capital expenses. * CAGR: Compound Annual Growth Rate, the average annual growth rate over multiple years. * LCV: Light Commercial Vehicle, smaller trucks and vans. * MHCV: Medium and Heavy Commercial Vehicle, larger trucks and buses.