Tata Motors Focuses on Small Commercial Vehicle Segment After Strong FY25 Performance

Key Highlights:

• Tata Motors' commercial vehicle business reported an EBITDA margin of 11.8%.
• Market share in heavy and medium commercial vehicles remained high at 48.8%.
• The company aims to revive its small commercial vehicle business through new launches.
• Tata Motors' commercial vehicle segment earned ₹21,500 crore in revenue during the fourth quarter of FY25.
• The company is set to demerge its commercial and passenger vehicle businesses by FY26.

Tata Motors Ltd delivered strong financial and operational results in its commercial vehicle (CV) segment for FY25. Despite the overall success, the company is shifting its focus in FY26 to strengthen its small commercial vehicle (SCV) category, which underperformed last year, as confirmed by Group CFO P.B. Balaji.

Strong Results for FY25

At Tata Motors' Investor Day 2025, Balaji shared that the company’s CV business has shown excellent capital efficiency, stable margins, and good cash flow generation. In FY25, the CV division achieved:

• EBITDA margin of 11.8%
• Free cash flow of ₹740 crore
• Return on capital employed (ROCE) of 37.7%

Tata Motors also spent ₹1,900 crore on capital expenditure in the CV business, which is 2.8% of the segment’s revenue. This was in line with the company’s internal plans.

Despite a challenging market, Tata Motors maintained a 48.8% market share in the heavy and medium commercial vehicle segment, showing strength in its core truck business. However, its overall CV market share dropped to 37.1% from 39.2% last year due to weak performance in the light commercial vehicle and SCV segments.

SCV Segment in Focus

Balaji said the company aims to bring back momentum to this segment and is confident about FY26, supported by stable market conditions and strong internal performance. To regain lost ground in the SCV category, Tata Motors plans to:

• Launch new products
• Strengthen its ACE and Intra platforms
• Introduce electric and bi-fuel variants
• Improve its dealer and service ecosystem

Operating Environment Looking Stable

According to Balaji, macroeconomic factors such as steady interest rates, stable fuel prices, low defaults, and low steel inflation are helping the CV industry. These stable conditions are expected to support the company’s growth in FY26.

Q4 FY25 Performance

For the quarter from January to March 2025, Tata Motors’ CV division recorded:

• Revenue of ₹21,500 crore, a small drop of 0.5% compared to last year
• EBITDA margin improved to 12.2%
• EBIT margin rose to 9.7%
• Profit before tax (PBT) stood at ₹2,100 crore

These figures show that profitability improved even though overall sales revenue slightly decreased.

Full-Year FY25 Financials

Yearly, the CV segment posted:

• Revenue of ₹75,000 crore
• EBITDA margin of 11.8%, up 100 basis points
• EBIT margin of 9.1%, up 90 basis points
• PBT of ₹6,600 crore

Balaji mentioned that seeing such a rise in profits even with revenue challenges is something the company hasn't experienced in nearly 25 years.

Stock Performance and Demerger News

Tata Motors shares were trading at ₹724.50 on Monday. The stock has gained around 7% in the last month but is still down about 25% from its 52-week high of ₹1,179 reached earlier in 2024. Investors are closely watching Tata Motors' upcoming move to separate its passenger and commercial vehicle divisions, a process expected to be finalized in the latter half of FY26.

As part of the plan, existing shareholders will receive one share in the newly formed commercial vehicle entity for every share they currently own in Tata Motors. This move is expected to unlock value and allow both divisions to grow independently with separate business strategies.

Also Read: Tata Motors Introduces Air Conditioned Cabins and Cowls across its Truck Range

CMV360 Says

Tata Motors has performed well in FY25, especially in the core CV segment. However, the drop in market share in the SCV segment shows that there is hope for improvement. The company’s strategy to focus on product innovation, including EV and bi-fuel options, seems timely. If the demerger goes as planned, it could make both the passenger and commercial vehicle businesses more focused and efficient.