The brokerage believes that the “stars are aligning” for the company, as both India and the European Union are heading into an upcycle for Commercial Vehicles, setting the stage for a robust volume and margin rebound.
Tata Motors Commercial Vehicles is expected to generate robust Free Cash Flow (FCF) over the next two years, helping the balance sheet to become lean again by financial year 2028, CLSA wrote in its note, adding that this will happen despite the company having taken debt to fund the €3.8 billion Iveco acquisition.
In financial year 2028-2029, Iveco’s volumes can see some acceleration after three muted years, on a lower base, and ahead of the Euro 7 shift, according to CLSA.”The Tata Motors CV-Iveco combination brings meaningful scale and supply-chain synergies, giving a strategic benefit to the merged entity,” CLSA said. Besides this, the adoption of Electric Vehicles across the Light Commercial Vehicle (LCV) chain is an added positive.
On February 17, HSBC had reiterated its bullish stance on Tata Motors CV with a price target of ₹534, stating that the company’s valuations remain at a discount to Ashok Leyland and other PV-focused peers.
The street is bullish on Tata Motors CV as none among the 24 analysts covering it have a “sell” rating on the stock. 21 out of the 24 have a “buy” rating, while the other three have a “hold rating.
Shares of Tata Motors CV ended 2.4% higher on Thursday at ₹491.35.
Also Read: Profit triples, revenue doubles: Revisiting the 10 years of Tata Sons chief N Chandrasekaran
