Nuvama Institutional Equities has reiterated its reduce rating on Tata Motors, with a target price of ₹670—suggesting a marginal upside of just 0.3% from the current market price of ₹668.00.
The note follows Tata Motors’ announcement of a proposed acquisition of Iveco’s commercial vehicle (CV) operations (excluding defence) for €3.8 billion, aimed at strengthening its global CV presence. Nuvama noted that the deal implies a 4x CY24 EV/EBITDA valuation and is expected to be earnings accretive by around 4% on a consolidated basis.
However, the brokerage estimates a fair value upside of only ~2% from the acquisition, assuming a similar valuation multiple. As a result, it believes the market may have largely priced in the strategic benefits of the acquisition.
Nuvama also flagged key risks, including a potential sales down-cycle in the EU and U.S. CV markets, which could impact near-term earnings performance for Tata Motors.
Disclaimer: The views expressed in this article are based on brokerage reports and do not constitute investment advice. Please consult your financial advisor before making any investment decisions.
