Tata Motors CV shares surge over 6% after Q1 profit growth

Tata Motors CV shares experienced a significant surge of over 6 percent on Thursday following the company's announcement of an impressive 83 percent year-on-year increase in consolidated profit after tax to ₹2,600 crore in the June quarter. The stock saw a trading price of ₹478.10 at 9.49 am, marking a high of ₹485, up from its previous close of ₹457.05.

Nomura upgraded the stock to a buy rating with a target price of ₹554, citing strong Q1 EBITDA performance and robust segment growth. The brokerage expects margins to improve further with potential price hikes and raised its FY27F MHCV demand growth estimate to 8 percent year-over-year from 5 percent. Nomura also anticipates healthy double-digit MHCV growth in Q2FY27E and noted the delivery of the Indonesia order by FY27-28E.

However, the company highlighted cost pressures and a 2.5 percent price hike implemented in July. Some supply constraints were also identified due to robust demand. CLSA maintained an outperform rating with a target price of ₹596, attributing the Q1 EBITDA margin of 11.3 percent to be higher than consensus by around 50 basis points.

The firm noted commodity inflation as a 340 basis point year-on-year negative impact on margins, partially offset by operating leverage and price hikes. CLSA expects double-digit growth in Q2FY27 volume, attributing the momentum to Tata Motors CV's sustained market share gains post GST cuts, with market share up 100 basis points year-over-year to 36.8 percent in Q1.

Elara Capital raised its target price to ₹508 from ₹423, expecting double-digit growth in Q2FY27 volume and a 3-4 percent CAGR in the MHCV industry over FY26-28E. Motilal Oswal reiterated a neutral rating with a target price of ₹434 per share, raising earnings estimates by 6 percent/2 percent for FY27/FY28, with a projected CAGR of 12 percent/10 percent/12 percent in revenue/EBITDA/PAT over FY26-28E.