Nomura has lowered its target price for Tata Motors Commercial Vehicles to Rs 511 from Rs 554, while highlighting a positive outlook for the commercial vehicle (CV) industry. The revised target price implies an upside of 29%, according to the brokerage.
In its October 23 report, Nomura said Tata Motors Commercial Vehicles' second-quarter performance was broadly in line with expectations, but higher-than-expected commodity prices were likely to delay margin recovery. The brokerage lowered its EBITDA estimates for FY27-29 by 4%, 6% and 3%, respectively.
Tata Motors Commercial Vehicles reported standalone revenue of Rs 240 billion in Q2FY27, up 42% year on year, compared with Nomura's estimate of Rs 245 billion and Bloomberg consensus of Rs 246 billion.
Average selling price declined 0.5% quarter on quarter to Rs 1.78 million, against Nomura's estimate of Rs 1.80 million. EBITDA rose 30% year on year to Rs 28 billion, 1.5% below both Nomura's and consensus estimates. The standalone free cash flow stood at Rs 46 billion, while net cash increased to Rs 113 billion at the end of the quarter from Rs 71 billion in Q1FY27.
Nomura raised its FY27 forecast for medium and heavy commercial vehicle (MHCV) industry demand growth to 15% year on year from 8%, citing strong demand momentum. The revised forecast implies growth of around 7% in the second half of FY27.