For TMCV, the brokerage has maintained its ‘Neutral’ rating with a price target of ₹416 per share, implying an upside of just 4% from current levels.
Motilal Oswal recently attended TMCV‘s annual investor day, where the management outlined its strategy to evolve into a globally diversified, technology-led commercial vehicle company, supported by profitable growth, market leadership and disciplined capital allocation.
The management reiterated its confidence in the medium-term commercial vehicle opportunity, driven by GDP-linked freight growth, rising logistics demand, electrification trends and continued expansion of the vehicle parc.
It also maintained its guidance of high single-digit industry growth in FY27, despite expecting some moderation in volumes during the second half of the fiscal year.
The company expects strong double-digit growth in the first quarter, with healthy momentum likely to continue into the second quarter.
Key focus areas include maintaining leadership in the truck segment, sustaining the turnaround in the small commercial vehicle and pickup (SCV-PU) business, accelerating electric mobility initiatives and scaling up downstream digital businesses.
Management also highlighted the proposed acquisition of IVECO as a transformational opportunity that could accelerate global expansion, unlock sourcing and engineering synergies and diversify earnings streams.
Additionally, TMCV reiterated its goal of achieving sustainable double-digit EBITDA margins while increasing its overall commercial vehicle market share to nearly 40%, aided by growth across the SCV-PU, buses, vans and ILMCV segments.
However, Motilal Oswal believes the stock is fairly valued at 21.7x FY27 estimated earnings and 18.6x FY28 estimated earnings, supporting its Neutral stance.
In a separate note dated June 24 on TMPV, Motilal Oswal highlighted key takeaways from the company’s analyst meet.
Management laid out a five-year roadmap through FY31, targeting a 15% volume CAGR, roughly half of what it achieved during FY21-FY26. This is expected to drive a 5-6% increase in market share to 20%. The company is also targeting structural cost reductions of 5-6%.
These initiatives are expected to help TMPV improve its standalone EBIT margin to 5%, excluding PLI benefits, from the current 1.4% level, while generating cumulative free cash flow of ₹10,000 crore over the period.
Volume growth is expected to be supported by six new nameplate launches and more than 20 product refreshes. The company plans to continue with its multi-powertrain strategy, with a significant portion of incremental volumes expected to come from EV and CNG-powered vehicles.
Other key enablers include expanding the dealer network to 3,200 outlets from the current 1,669, increasing service centres to over 3,000 from 1,211 currently, and raising annual production capacity to 1.3 million units from 900,000 units.
Despite a favourable long-term outlook for the Indian passenger vehicle market, Motilal Oswal expects near-term margin pressures due to a sharp increase in input costs.
The brokerage also said that JLR continues to face multiple challenges on both the demand and cost fronts.
Given the ongoing headwinds at JLR and persistent geopolitical uncertainties, Motilal Oswal has reiterated its ‘Sell’ rating on TMPV with a price target of ₹312 per share, implying a downside of 12% from current levels.
Shares of TMCV ended Tuesday’s session 2.03% lower at ₹400.05, while TMPV shares closed 1.95% lower at ₹354.45.
