The Tata Motors share price will be in focus today. The company has proposed to acquire Iveco Group (excluding defence business) at €3.8 billion (approximately $bn), which implies an enterprise value by EBITDA valuation of 4x for Calendar Year 2024. This acquisition shall provide Tata Motors access to the Iveco brand, emerging technologies, and high-tech products, along with better penetration in global markets. Thereby strengthening its global commercial vehicle (CV) footprint, said Nuvama Institutional Equities.
The proposed offer would bring together two businesses with sales of 540,000-plus units/year and combined revenue of more than Rs 2.20 lakh crore across Europe (50%), India (35%) and other regions (15%).
Nuvama has maintained its ‘Reduce’ rating on Tata Motors, with a target price of Rs 670.
The success of the offer is subject to an acceptance level of 80% and is likely to close by April 2026. “We estimate this acquisition shall be EPS accretive with consolidated EPS accretion at 4%. Applying a 4x EV/EBITDA to Iveco, the upside to fair value could be 2%,” said Nuvama.
Exor N.V., which is Iveco Group’s largest shareholder, has committed to support the offer and tender its shareholding representing 27.06% stake and 43.11% of voting rights.
However, the brokerage said that the key downside risk for Iveco is the possibility of a sales down-cycle in Europe and US CV markets, which could result in lower earnings in the near-term.
The Tata Group company is yet to report its quarterly earnings for the first quarter of the financial year 2025-26.
Tata Motors Q4 FY25 results
Tata Motors posted a 51% drop in consolidated net profit to Rs 8,470 crore in Q4 FY25, due to a deferred tax asset of almost Rs 9,000 crore in the corresponding quarter of the previous financial year and an exceptional item of Rs 566 crore during the quarter. The owner of Jaguar and Land Rover posted a revenue increase of 0.5% year-on-year at Rs 1.18 lakh crore for Q4 FY25. On the operating front, the Earnings before interest, tax, depreciation, and amortisation (EBITDA) for Q4 FY25 fell 4.1% to Rs 16,700 crore.
Tata Motors’ stock performance
In the last five trading sessions, the stock price of Tata Motors has fallen 4.7%. The share price of Tata Motors has declined by 2.9% in the past one month and 6.7% in the last six months. Tata Motors’ share price has erased over 42% of investors’ wealth in the last one year.