HSBC Upgrades Tata Motors’ CV Arm to ‘Buy’ on Re-Rating Hopes

By Amit Jangra | Published Date : November 19, 2025

HSBC upgrades Tata Motors’ CV unit to “Buy,” expecting a re-rating after the demerger and improved focus on trucks and buses.

Brokerage firm HSBC has started coverage on Tata Motors Commercial Vehicles Ltd. (TMLCV) with a fresh ‘Buy’ rating and a price target of ₹380. The firm said the newly demerged commercial vehicle arm has strong chances for a re-rating as the business becomes more focused and stable.

TMLCV is the unit that makes tata trucks, buses and other heavy commercial vehicles.

Target Raised for Ashok Leyland Too

Table of Contents

1. Target Raised for Ashok Leyland Too

2. Demerger Creates Two Clear Businesses

3. Why HSBC is Positive on TMLCV

4. Market Position After Listing

Read More: Tata AutoComp Boosts Global Reputation With Third Deming Award

Along with this call, HSBC also increased the price target for Ashok Leyland to ₹160, up from ₹145 earlier, but kept a ‘Hold’ rating.
The brokerage valued both companies’ CV businesses at 14x their estimated FY27 EV/EBITDA, saying the valuation feels fair considering the improving sector trend.

Demerger Creates Two Clear Businesses

Tata Motors finished its big demerger on October 1, splitting the group into two separate units — passenger vehicles (PV) and commercial vehicles (CV).
The CV company is now listed independently in the market.
Earlier, the whole CV industry traded around 12x EV/EBITDA, while PV companies traded higher at 15–17x.
HSBC now believes this gap may reduce because the overall business cycles of both industries are getting somewhat similar.

Why HSBC is Positive on TMLCV

HSBC said TMLCV has lost about 3% market share between FY23 and FY25, but this was mainly because the MHCV bus market grew faster than goods carriers. Without this change, its share would have been nearly the same.
The firm noted that the company follows premium pricing and strong discipline, which helps it maintain better gross margins.
However, higher costs earlier stopped these gains from fully showing in operating margins. HSBC expects things to improve as the new management can now focus only on CVs.
The commercial vehicle business listed at ₹330 per share on November 12, which was about 28% above the pre-open discovery price.

Market Position After Listing

Before the demerger, Tata Motors shares were around ₹660.75 and the PV business later began trading at ₹400 per share.
Even though the passenger vehicle business is bigger, the CV division usually contributed 18–20% of the company’s combined earnings.
This includes products like the tata mini truck, different cargo carriers and even small models such as the mini truck category. Some rural markets also rely heavily on the Tata pickup, which helps boost the company’s overall reach.

Also Read: Montra Empowering Light EV Lineup With SCV

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Frequently Asked Questions 

1. Why did HSBC upgrade Tata Motors’ CV business?

Ans: HSBC said the CV unit has good re-rating potential after the demerger and better focus on operations.

2. What is the new price target for TMLCV?

Ans: HSBC set a price target of ₹380 for the newly listed TMLCV business.

3. Did Ashok Leyland get a rating change too?

Ans: HSBC kept a “Hold” rating but increased Ashok Leyland’s target price from ₹145 to ₹160.

4. Why is the CV sector expected to improve?

Ans: HSBC believes CV valuations may rise because industry cycles are becoming more stable and closer to passenger vehicle industry trends.

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