Tata Motors Hits FY25 CV Targets; Trucks Hold Steady, SCV Segment Under Focus

Tata Motors Ltd has delivered on most of its key financial and operational goals for the commercial vehicle (CV) segment in FY25, but will focus on fixing the underperforming small commercial vehicle (SCV) business in the current fiscal, Group CFO P.B. Balaji said on Monday.

Balaji, speaking at the company’s Investor Day 2025, noted that the CV business has demonstrated strong capital efficiency, robust cash generation, and stable margins, adding that regaining momentum in the SCV category would be a key area of attention going forward.

As per the company’s presentation, the CV segment posted an EBITDA margin of 11.8%, free cash flow of Rs 740 crore, and a return on capital employed (ROCE) of 37.7% in FY25. Capex stood at Rs 1,900 crore, or 2.8% of segment revenue, in line with internal guidance.

Tata Motors maintained a 48.8% market share in the heavy and medium commercial vehicle categories, reflecting resilience in its core truck business. However, overall CV market share declined to 37.1% from 39.2% a year earlier, due to softness in the light commercial and SCV segments.

The company outlined plans to address this through new product introductions, ecosystem development, and increased competitiveness in its ACE and Intra platforms, including electric vehicle (EV) and bi-fuel variants.

The company is entering FY26 with renewed confidence in its Commercial Vehicle (CV) business. The company informed that, along with resilient financial performance and a strong product cadence, its market share is improving across key segments, even as it navigates global uncertainties and demand-side pressures, just as the broader market does.

Balaji said the company’s CV operations are now on firmer ground, underpinned by stable macro conditions and internal operational discipline. “All the fundamentals for CV growth are aligning well—steady interest rates, stable fuel prices, low delinquencies, and muted steel inflation. These factors point to stability in the operating environment,” Balaji said during the company’s Q4 FY25 earnings call.

For the January–March quarter, the CV business posted revenue of Rs. 21,500 crore, down 0.5% year-on-year. Despite the marginal decline, EBITDA improved by 20 basis points to 12.2%, EBIT rose by 10 basis points to 9.7%, and profit before tax (before exceptional items) stood at Rs. 2,100 crore.

On a full-year basis, the CV division reported revenue of Rs. 75,000 crore, with EBITDA margin at 11.8% (up 100 bps), EBIT margin at 9.1% (up 90 bps), and PBT before exceptional items at Rs. 6,600 crore—confirming that profitability improved despite topline pressure, which Balaji noted was “probably happening for the first time in 25 years.”

Stock Steady, Demerger to Unlock Value 

Tata Motors shares were trading at Rs. 724.50 on Monday, posting modest gains in recent sessions. The stock is up around 7% over the past month, but remains 25% below its 52-week high of Rs. 1,179 touched in mid-2024.

Investor attention is also centered on the upcoming demerger of Tata Motors’ passenger and commercial vehicle businesses, expected to take effect in the second half of FY26. Under the approved structure, shareholders will receive one share of the new CV entity for every share of Tata Motors they hold.

The demerger is widely expected to unlock value and allow each division to pursue independent growth strategies.