Tata Motors, one of India’s leading automobile manufacturers, is under scrutiny from brokerages following its recent analyst meet where the company outlined several strategic developments. Despite strong domestic performance, analysts have turned cautious due to global headwinds and execution risks tied to its proposed demerger, the IVECO acquisition, and cybersecurity concerns at Jaguar Land Rover (JLR).
Demerger Strategy: PV and CV Businesses to Split
Tata Motors announced its intent to demerge its Passenger Vehicle (PV) and Commercial Vehicle (CV) businesses, aiming for separate listings by October or November 2025, pending regulatory approvals. The move is designed to unlock value and improve operational focus. However, analysts remain skeptical about the timing and execution, especially given the recent slowdown in PV demand.
The company acknowledged that even SUVs were being pushed with discounts due to weak consumer sentiment. While demand recovery began in early September, the broader industry saw a double-digit dip post-GST rework. Tata Motors claims a 25 percent year-on-year growth in bookings, outperforming the industry average of 20 percent, but profitability remains under pressure.
In the CV segment, the impact of GST rate cuts is expected to vary. Input tax credit (ITC) availability among B2B operators limits the benefits for high-tonnage vehicles, while low-tonnage vehicles like Small Commercial Vehicles (SCVs) may gain more. Analysts are watching how this segmentation plays out post-demerger.
IVECO Acquisition: Strategic but Risk-Laden
Tata Motors’ proposed $4.5 billion acquisition of Italian truckmaker IVECO has raised eyebrows. The deal, which excludes IVECO’s defense division to navigate Italy’s regulatory hurdles, is expected to be EPS accretive from Day 1 and generate strong free cash flow. Management is targeting a 20 percent return on capital employed (RoCE) and sees synergies in R&D, supply chain, and product portfolios.
However, brokerages are divided. Emkay Global sees potential for Tata Motors to scale its CV business significantly, especially in South America, with revenues projected to expand from ₹7,000 crore to ₹2 trillion. Yet, concerns persist about geographic concentration—IVECO derives 75 percent of its sales from Europe, a structurally low-growth and cyclical market.
Moreover, IVECO’s EBIT margin of 5.3 percent is lower than Tata Motors’ 8.7 percent, suggesting medium-term margin dilution. Integration challenges and increased leverage are also key risks flagged by investors.
JLR Cyber-Attack: A Blow to Global Operations
Adding to the uncertainty, Tata Motors revealed that its UK-based luxury arm Jaguar Land Rover (JLR) recently suffered a cyber-attack. While details remain limited, the incident has disrupted operations and raised concerns about data security and business continuity. Analysts fear this could impact JLR’s already fragile demand outlook in Europe, China, and the US.
Brokerage Ratings: Mixed to Bearish
- Emkay Global: Maintains ‘Buy’ with a target of ₹750
- Nuvama Institutional Equities: Retains ‘Reduce’ with a target of ₹680
- Motilal Oswal: Reiterates ‘Neutral’ with a target of ₹686
The divergence in ratings reflects the complexity of Tata Motors’ strategic roadmap and the uncertainty surrounding its global ambitions.
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