Tata Motors shareholders received one share of TMLCV for every Tata Motors share held, with October 14 as the record date for the demerger. Based on Tata Motors’ pre-demerger price of Rs 660.75 and the opening level of its passenger vehicle arm near Rs 400, the implied value for TMLCV stands at around Rs 260-270 per share.
Listing expectations and near-term volatility
According to Harshal Dasani, Business Head at INVasset PMS, “Tata Motors Commercial Vehicles Ltd (TMLCV), carved out from Tata Motors’ demerger, lists tomorrow in what will be one of the most closely watched debuts in the auto sector this year. The implied value per share, based on the parent’s pre-demerger price, hovers around Rs 260-Rs 270, translating to a market capitalisation near Rs 90,000 crore.”
Dasani said, “Grey market indications suggest a flat to slightly positive listing as investors weigh near-term margin normalization against the long-term growth runway in India’s commercial vehicle cycle.”
Meanwhile, Abhinav Tiwari, Research Analyst at Bonanza cautioned that the stock “could see volatility in prices as retail and institutional participants recalibrate portfolios post demerger,” adding that investors “should be cautious as share prices face a technical risk amid index adjustments and portfolio adjustments.”
Industry tailwinds and valuation outlook
Dasani said that TMLCV enters the market with improving demand visibility, driven by “fleet replacement, infra capex, and last-mile logistics,” though he noted profitability remains cyclical, with EBITDA margins around 8–9% and sensitive to fuel, freight, and financing costs. “Valuations are broadly aligned with peers like Ashok Leyland and M&M’s CV business, leaving limited immediate rerating potential,” he said.Tiwari agreed that the CV business is poised to benefit from its market leadership and steady cash generation, supported by an expected upturn in India’s commercial vehicle sector through FY26–27.
Brokerages see value creation
Brokerages broadly agree that the split unlocks clearer valuation for Tata Motors’ two core businesses. ICICI Securities’ Pankaj Pandey said, “There should be value creation because what we are expecting for CV business is 11 times EV/EBITDA on FY27 basis, so that comes about Rs 300 odd because comparable peers are also getting similar multiples.”
Nomura pegged fair values for TMPV and TMLCV almost equally, at Rs 367 and Rs 365, respectively, though it warned of “technical risk for the share price” amid index adjustments and portfolio realignments. YES Securities called the demerger a “value unlocking opportunity,” while Bonanza Research’s Khushi Mistry said the move “will lead to sharper business focus for both entities.”
Analysts bullish on CV arm
Brokerages, including Ambit Institutional Equities, see the commercial vehicle (CV) 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 estimated TMLCV’s fair value in the range of Rs 320-470, 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 pointed to Tata Motors’ pending acquisition of Italy’s Iveco Group NV’s commercial vehicle operations for €3.8 billion as a potential game changer.
“The CV business is set to benefit from its market leadership and steady cash generation. The acquisition of Italy’s Iveco operations would further strengthen Tata’s global presence,” said Tiwari.
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 TMLCV as a global contender in the medium and heavy commercial vehicle segment.
For now, the listing will test investor sentiment toward 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.”
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)