The stock of Tata Motors Commercial Vehicles Ltd (TMLCV), the entity newly created from the demerger of Tata Motors’ commercial vehicle business, made a highly successful market debut, listing at a substantial premium.

The shares opened with significant investor enthusiasm, achieving a premium of over 26% to 28% compared to its estimated implied value of around Rs 260.75. The stock began trading on the National Stock Exchange (NSE) at Rs 335 before rising further, reflecting strong confidence in the commercial vehicle manufacturer, which is the largest truck and bus maker in India.

Why Investors are Upbeat

Market analysts attribute the positive reception primarily to optimism surrounding India’s ongoing commercial vehicle upcycle and the continuous push for infrastructure growth. The general consensus is that the demerger is a strategic move that helps unlock shareholder value.

By separating the stable, cash-generating commercial vehicle segment from the high-growth passenger vehicle and electric vehicle (EV) businesses, investors are now able to value each entity based on its individual strength. This move effectively eliminates the “conglomerate discount” that often weighs down diversified companies, allowing a focused investment on India’s freight and logistics sector.

Valuation and Future Outlook

In the fiscal year 2025 (FY25), TMLCV reported a revenue of Rs 75,055 crore and an EBITDA of Rs 8,856 crore. Market experts, using comparable valuations (like that of Ashok Leyland), suggested a fair value for TMLCV in the range of Rs 310 to Rs 320 per share, indicating that the stock debuted slightly above this implied fundamental value.

Looking ahead, the company’s prospects are enhanced by the pending €3.8 billion acquisition of Iveco Group NV’s commercial vehicle operations. This deal is viewed as a significant long-term strategic catalyst that is expected to provide TMLCV with technological advancements, potentially transforming it into a global contender in the medium and heavy commercial vehicle space.

While some short-term volatility is anticipated due to fund rebalancing following the demerger, analysts largely maintain a positive long-term view. They suggest that investors with a medium-to-long-term horizon (three to five years) should hold the stock, supported by recovering GDP-linked demand, infrastructure expansion, and regulatory upgrades driving the need for newer, more efficient vehicles.