Nuvama Institutional Equities has maintained its 'Buy' recommendation for Tata Motors' commercial vehicle (TMCV) business, despite a slight reduction in its target price for the shares. The brokerage adjusted its target from Rs 500 to Rs 480 per share, citing revised earnings estimates.
Q4 FY26 Performance and Revised Outlook
For the fourth quarter of fiscal year 2026, Tata Motors' commercial vehicle segment reported a standalone revenue of Rs 24,450 crore, marking a 22 percent year-on-year increase. However, this figure fell marginally short of Nuvama's projections due to weaker-than-expected realisations.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) for the period jumped 36 percent to Rs 3,310 crore. This, too, was below expectations, primarily attributed to the revenue miss and higher-than-anticipated other expenses. Consequently, Nuvama has trimmed its FY27–28E EPS (Earnings Per Share) estimates by up to 4 percent, factoring in lower volume assumptions and persistent cost pressures. Despite these adjustments, the brokerage anticipates a revenue CAGR (Compound Annual Growth Rate) of 9 percent and an EBITDA CAGR of 8 percent over FY26–28E.
Exports and Electric Vehicle Expansion Drive Growth
A significant catalyst for Nuvama's positive outlook is the robust performance expected from TMCV's export business. The brokerage projects a remarkable 48 percent CAGR in exports over FY26–28E, largely driven by a substantial order of approximately 70,000 units from Indonesia. This order includes 35,000 units each of the Yodha pickup and Ultra T.7 trucks.
Domestically, TMCV is expected to slightly outpace the broader commercial vehicle industry, with domestic volumes projected to grow at a 3 percent CAGR during the same period. The company's strategic expansion into the electric vehicle (EV) sector also plays a crucial role. TMCV is actively strengthening its presence in both passenger and cargo EV segments, having already delivered over 3,800 units. The company is now evaluating participation in upcoming government tenders, buoyed by recent assurances regarding payment security.
Recent product launches include multiple electric trucks of up to 55 tonnes, and Tata Motors is also scaling up sales of its popular small commercial vehicle (SCV) model, the Ace. On Thursday, Tata Motors (TMCV) shares closed 1.26 percent lower at Rs 379.50.
Nuvama's valuation for TMCV includes 14x FY28E EV/EBITDA for the core business, along with an attributed value of Rs 91 per share for Iveco and Rs 13 per share for Tata Capital.