Tata Motors shares slide 7% in 5 sessions; how beneficial is IVECO acquisition?

In the past five sessions, the scrip has lost over 6.7% of its value (as of afternoon trade on August 1, 2025).

The size of the deal has investors worried.

In its research note, analysts at InCred Equities note that the acquisition will prove little beneficial for India CV markets, as most of IVECO’s products are premium-end high-tonnage trucks, buses, and vans, whose market size may be just around 10% of the MHCV volume, and hence the benefits may be limited for India operations.

MHCV stands for medium and heavy commercial vehicle.

It added that Tata Motors' domestic market share erosion can accelerate as the top management’s priority in the next one to two years will be to absorb the mammoth IVECO (2x sales), and with no major launch in the LCV segment, they believe the market share erosion will prolong.

LCV stands for light commercial vehicle.

The analysts at the investment firm note that the medium-term technology investment synergy benefits and India export volume improvement are the best-case benefits from this deal.

"IVECO’s engine division (22% of sales) looks promising; however, a slow start in EVs (2,500 units in CY24) and the Chinese import threat in the European bus market are areas of concern," they note.

The management gave FCF synergy guidance of nearly 0.5% for the combined entity’s sales from FY28F.

It expects EPS (earnings per share) breakeven in two years and the acquisition-related debt repayment in four years. "It plans to fund 35% of the acquisition via equity in the coming one-year period, which, we feel, will lead to a 15-18% dilution in the commercial vehicle or CV division’s expected value, post-split, and a 10% downside to our current SOTP-based target price," the report added.

FCF synergy in the context of mergers and acquisitions (M&A) refers to the improvement in Free Cash Flow (FCF) that is expected to result from the combination of two companies.

About Iveco Group

Iveco Group N.V. is a Dutch public limited company incorporated on June 16, 2021, headquartered in Turin, Italy.

The group designs, manufactures, and sells trucks, commercial and defence vehicles, buses, and powertrains; it also provides financial services to its dealers and customers.

The transaction intends to acquire the non-defence business comprising trucks, buses, powertrains, and financial services.

Tata Motors: A quick look at the deal

In the automotive space, the company's largest acquisition to date is its buyout of British brand Jaguar Land Rover for $2.3 billion in 2008.

The executive committee of the company's board has approved the acquisition of 100% of the common shares of Iveco Group NV through an all-cash voluntary tender offer (excluding the defence business), subject to all regulatory, statutory, and all other necessary approvals, the Mumbai-based auto major said in a regulatory statement.

Tata Motors and Iveco Group said they have "reached an agreement to create a commercial vehicles group with the reach, product portfolio, and industrial capability to be a global champion in this dynamic sector."