Tata Motors Commercial Vehicles Ltd (TMLCV) made a noteworthy entry into the stock market, launching with a 28% premium, signaling robust investor confidence in India's leading truck and bus manufacturer. On its inaugural trading day, TMLCV shares commenced trading at Rs 335 on the National Stock Exchange (NSE), a significant rise from the initial value of Rs 260.75. Similarly, the Bombay Stock Exchange (BSE) saw TMLCV open at Rs 330.25, marking a 26.6% increase. The stock subsequently increased further by 3% on the NSE, reaching Rs 345, showcasing a strong enthusiasm from investors post-demerger.
Industry analysts credit the successful listing to the strategic separation of Tata Motors’ passenger vehicle and electric vehicle (EV) sectors from its commercial vehicles (CV) arm. This new structure allows for a more targeted evaluation of each business entity. Jahol Prajapati, a research analyst at SAMCO Securities, observed that shareholders receive one TMLCV share for each Tata Motors share, maintaining ownership levels.
The CV division is crucial to India's economic narrative, facilitating logistics and infrastructure projects. Analysts predict increasing demand for commercial vehicles due to enhancing freight activities, declining commodity costs, and a significant reduction in Goods and Services Tax (GST) from 28% to 18%. This shift is expected to further propel demand from construction and logistics sectors, thus bolstering TMLCV's growth outlook.
Financially, TMLCV reported revenues of Rs 75,055 crore and an EBITDA of Rs 8,856 crore for fiscal year 2025, indicating an impressive margin of 11.8%. Analysts estimate TMLCV’s value at approximately Rs 1.14 lakh crore, translating to a share price range between Rs 310 and Rs 320.
Moreover, the demerger is predicted to alleviate the 'conglomerate discount' often associated with large multi-business corporations, providing investors a clearer focus on the growing commercial vehicle sector, which is backed by favorable policy changes and economic factors. Harshal Dasani, Business Head at INVasset PMS, emphasizes the dual opportunities for investors: potential gains aligned with India’s commercial vehicle market growth, juxtaposed against the challenges of early-stage independent listing dynamics and margin cyclicality in the sector.
Brokerage firms are optimistic about TMLCV's prospects post-demerger. Ambit Institutional Equities identifies the CV sector as particularly well-positioned to leverage the benefits of the split, anticipating immediate value enhancement. Other brokers, like SBI Securities, have estimated TMLCV's fair value between Rs 320 and Rs 470, citing the ongoing acquisition of Italy's Iveco Group NV as a transformative factor in expanding Tata's global footprint in the commercial vehicle realm.
In conclusion, TMLCV's listing marks a significant milestone in India's automotive cycle. While there may be some volatility as markets adjust, the commercial vehicle sector appears primely positioned for growth, driven by increasing demand and operational expansions. Investors are encouraged to consider TMLCV in medium-term portfolios over a three-to-five-year horizon for a balanced opportunity in India's expanding market.