Tata Motors Set To Become A Global CV Player With The Iveco Buyout, Says Motilal Oswal Maintaining 'Neutral'

Tata Motors’ Board has approved the acquisition of a 100% stake in IVECO Group NV, through an all-cash voluntary tender offer (ex-defense), subject to regulatory approvals. The transaction price offered is at an equity value of €3.8 billion, which translates to two-times trailing twelve months EV/Ebitda.

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Motilal Oswal Report

With the planned funding strategy, Tata Motors Ltd. expects to-

1. remain free cash flow positive in both companies,

2. reach EPS breakeven in two years, and

3. repay the acquisition debt in four years.

While there is no doubt that this acquisition will provide scale and tech access to Tata Motors’ CV business, it comes with its own risks, such as:

1. uncertain macro backdrop in Europe that is reflected in the downward revision of Iveco’s growth guidance for CY25,

2. the scale of the transaction may lead to unnecessary financial stress on the balance sheet until it is well integrated, and

3. Iveco’s stock has doubled in the last 12 months, which means that the acquisition is not inexpensive.

We refrain from incorporating the Iveco financials into our numbers at this stage as we await more clarity on the deal.

We reiterate our Neutral rating on Tata Motors given the current headwinds at JLR.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.