Tata Motors CV Stock Soars 30%: Analysts Bet on Sustained Upcycle

Introduction

Since its demerger and subsequent listing, Tata Motors' commercial vehicle (TMCV) business has become a standout performer on Dalal Street. The stock has consistently hit new record highs, fueled by a combination of robust sales figures, a positive industry outlook, and a series of bullish ratings from major brokerages. This surge contrasts with the more subdued performance of its passenger vehicle counterpart, highlighting a strategic shift in investor focus towards the high-growth CV segment.

The Demerger Unlocks Value

The demerger, which took effect on October 1, 2025, separated Tata Motors into two distinct entities: Tata Motors Commercial Vehicles (TMCV) and Tata Motors Passenger Vehicles (TMPV). The CV business made its stock market debut on November 12, 2025, listing at approximately ₹335 per share, a significant premium of over 28% to its discovered price of around ₹261. This move was designed to provide investors with clearer, more focused exposure to two fundamentally different businesses—the cyclical, infrastructure-linked CV market and the consumer-driven PV market.

A Powerful Stock Rally

The market's response to the newly listed CV entity has been overwhelmingly positive. In a remarkable run, the stock surged to new highs, touching ₹403.10 and even ₹427.9 in intra-day trading sessions. During December 2025 alone, the stock rallied 14%, significantly outperforming the broader Sensex. Over a one-month period following its listing, TMCV zoomed approximately 30%, demonstrating strong investor confidence and momentum.

Key Drivers Behind the Surge

A primary catalyst for the rally is the company's exceptional sales performance. In November 2025, Tata Motors reported a 28.6% year-on-year (YoY) increase in total commercial vehicle volumes. The growth was broad-based and robust across all segments. Heavy Commercial Vehicle (HCV) volumes jumped by 34.2% YoY, while the Intermediate, Light, and Medium Commercial Vehicle (ILMCV) segment grew by 35.0%. Even more impressive was the 91.7% YoY surge in exports, indicating strong demand from overseas markets. This growth is attributed to improved fleet utilization after the festive season, positive sentiment following GST rate reductions, and a general pickup in economic activity.

Strong Financial Health and Cash Flow

Underpinning the operational success is a solid financial foundation. The company reported a strong free cash flow (FCF) of ₹2,200 crore in the second quarter of FY26. For the first half of FY26, the FCF reached a record ₹417 crore. The CV business reported an EBITDA margin of 11.8% for FY25 on revenues of ₹75,055 crore, showcasing healthy profitability. Management expects this financial discipline to continue, supported by volume growth and cost-rationalization measures post-demerger.

Bullish Analyst Recommendations

The analyst community has turned decidedly bullish on TMCV. Several major brokerages have initiated coverage with 'Buy' or 'Overweight' ratings, citing a favorable outlook for the Indian CV cycle. JPMorgan set a target price of ₹475, highlighting the potential from a CV recovery, pricing discipline, and the value-accretive acquisition of Iveco. Bank of America mirrored this sentiment with a 'Buy' call and a ₹475 target, forecasting a 15% EBITDA CAGR for FY26-FY28. Ambit Institutional Equities also initiated coverage with a 'Buy' rating and a ₹430 target, emphasizing the company's market leadership and improving profitability.

Valuation and Peer Context

Despite its sharp rally, analysts note that TMCV still trades at a slight valuation discount of about 6% to its primary competitor, Ashok Leyland, on an EV/EBITDA basis. Given TMCV's stronger revenue and EBITDA growth CAGR between FY18-FY25 compared to its rival, many believe this valuation gap is likely to narrow as the company continues to execute on its strategy and the benefits of the Iveco deal materialize.

Technical Indicators Signal Strength

The positive fundamental story is supported by bullish technical signals. On February 9, 2026, several key Exponential Moving Average (EMA) crossovers occurred on the daily charts, indicating strong upward momentum. Historically, these signals have preceded short-term price gains.

The Other Half of the Story: Passenger Vehicles

In contrast to the CV business, the passenger vehicle arm (TMPV) has faced a more challenging environment. The stock has underperformed, weighed down by intense competition in the electric vehicle (EV) space and profitability headwinds at its Jaguar Land Rover (JLR) unit. While the PV segment reported a 24% YoY revenue jump to ₹15,317 crore in a recent quarter on the back of a 22% volume increase, investor sentiment has clearly favored the more robust and cyclical CV story post-demerger.

Future Outlook and Market Position

Looking ahead, the outlook for Tata Motors' CV business remains bright. S&P Global Ratings has assigned a 'stable' outlook, expecting the company to maintain its dominant market share, supported by India's economic growth, government spending on infrastructure, and buoyant consumer demand. The management is focused on sustaining growth across all CV segments and expects the positive momentum to continue through the second half of FY26. The proposed acquisition of Iveco is seen as a strategic move to gain global scale and technology, which, while increasing leverage, is considered credit-neutral due to expected gains in business competitiveness.

Conclusion

The demerger of Tata Motors has successfully unlocked significant value for its commercial vehicle business. With a powerful combination of surging sales, strong cash flows, bullish analyst sentiment, and a favorable macroeconomic backdrop, TMCV has established itself as a formidable, standalone entity in the Indian auto sector. As the CV upcycle gains traction, investors will be closely watching whether the company can sustain its growth trajectory and close the valuation gap with its peers.