Tata Motors Post-Demerger Valuation Analyzed

Key Points

• Nomura values Tata Motors equally, ₹367/share PV, ₹365/share CV.
• Demerger effective Oct 1, 2025, record date Oct 14, 2025, focus on CV pricing.
• PV demand boosted by GST cut, premium vehicles like Harrier EV selling well.
• JLR recovery post-cyberattack, forecasts improved margins for FY26.
• CV growth expected, Iveco acquisition planned, debt financing utilized.
• Iveco integration impacting results, careful monitoring of future value.

Tata Motors Post-Demerger: A Closer Look

Following the planned split of Tata Motors, investment bank Nomura has created separate target prices for the company’s passenger vehicle (PV) and commercial vehicle (CV) businesses. They predict a price of ₹367 per share for the PV side, which includes brands like Jaguar Land Rover (JLR) and Tata Technologies. The CV portion is estimated at ₹365 per share.

The demerger is set to take place on October 1, 2025. The company’s record date, October 14, 2025, is attracting significant attention as experts discuss how the price of the CV business will be determined. Tata Motors’ PV shares dipped 1.17% to ₹394.35, while the broader Sensex fell 0.3%.

The PV business is expected to see a boost from a recent change in taxes called GST. This change took effect on September 22, 2025, and is fueling higher demand for popular models like the Punch and Nexon. A new electric version of the Harrier is also attracting a lot of interest, with more orders than expected.

Tata Motors is aiming for better profits in the long term, aiming for Ebitda margins of double digits by 2026. JLR, the luxury car brand, is recovering from a recent cyberattack and is planning to increase production. However, Nomura believes JLR’s profits might not be as high as the company hopes, and there could be issues with cash flow.

For the CV business, analysts expect a modest increase in sales. This is partly due to the GST cut. The company plans to buy Iveco, a European truck maker, which will add to their sales. They will finance this purchase using a lot of debt initially, and then some equity later. However, Nomura doesn’t think this deal will immediately add a lot of value.

The Iveco business has been struggling recently, with sales down. The company is predicting sales will grow by around 5% in the next year. They hope to improve profits from 5.4% to 7.5% over the next few years. Careful watching of the Iveco business will be important for the future of Tata Motors.

“Understanding the combined performance of these two businesses is critical for assessing Tata Motors’ long-term success.”