Tata Motors commercial vehicle unit debuts on NSE, BSE: What lies ahead for investors, company?

The listing of Tata Motors Commercial Vehicles (named as Tata Motors Ltd) business comes after the Tata Motors demerger was completed and the company was split into two independent listed entities.

The stock of Tata Motors' commercial vehicles arm opened at ₹335, up 28.48% from its discovered price on the NSE.

On the BSE, it listed at ₹330.25, up 26.09%.

Tata Motors' demerger took effect from October 1.

In 2024, Tata Motors announced the demerger of its businesses into two separate entities.

As part of the demerger, the commercial vehicles business and related investments were moved into one company, while the passenger vehicles (PV) business, including PV, electric vehicles, Jaguar Land Rover and related investments, formed the other entity.

What analysts say

According to news reports, analysts tracking the stock and sector said that the demerger would likely bring stronger capital efficiency, a clearer strategic focus, and better valuation for both arms.

Analysts at Ambit Institutional Equities, as per news reports, view the commercial vehicle segment as the near-term beneficiary of the restructuring. Ambit described the demerger as a “separation of value and growth propositions," highlighting that the CV unit is better placed to capitalise on its market leadership and strong cash flows.

The firm expects “immediate value unlocking" for the CV segment, estimating TMPV’s residual value could stabilise around ₹380 per share.

Meanwhile, several other analysts cited by various business news outlets stated that listing the CV unit represents a significant move toward unlocking long-term value.

The demerger separates the rapidly expanding passenger vehicle and EV segment from the more stable, cash-generating CV business, enabling investors to assess each division on its individual strengths.

Under the plan, shareholders will receive one TML CV share for every Tata Motors share they own, ensuring there is no dilution of ownership.

The listing eliminates the “conglomerate discount” and offers investors a more targeted opportunity to capitalise on India’s commercial vehicle upcycle — a stable, cash-generating, value-orientated investment supported by favourable policy and economic trends, they add, as per the news reports.

It must be noted that Tata Motors CV unit is now the largest commercial vehicle (CV) player in India, with the arm's shares getting listed on the stock exchanges.

Analysts note that the prospects of the commercial vehicle unit are bright given the several tailwinds.

They opine that the CV segment lies at the core of India’s growth journey, driving progress in logistics, mining, and infrastructure development. With freight activity picking up, commodity prices softening, and the GST rate reduced from 28% to 18%, demand for commercial vehicles is set to surge.

Additional momentum will come from fleet replacements and fresh demand from the construction and logistics sectors.