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H2 growth outlook improving for PVs/CVs after the GST cuts

We attended TTMT’s analyst meet to discuss the upcoming demerger, the IVECO acquisition (refer to our note), updates on JLR after the recent cyber-attack. KTAs: 1) Demerger expected to materialize mid-Oct (subject to ROC approvals); PV business to be retained in existing entity; CV business to be listed separately (likely early-Nov). 2) The mgmt upgraded FY25-30 CV industry CAGR outlook to 6-8% (5-7% earlier), on recent GST cuts; immediate benefit of a 1-2% opexcut for fleet operators to directly aid bottom-line. The mgmt expects doubledigit CV industry growth in H2, incl SVCs (vs flat H1). Pricing discipline/margin focus to continue in CVs. 3) Saw 25-30% booking growth from 5-Sep till Navratras (industry: 20%); Q3 to see higher discounts to push volumes. After a flat H1, the mgmt expects 7-8%/sub-5% PV industry growth in H2/FY26. 4) IVECO acquisition transactionally prudent; concerns of EU exposure captured in valuations (2.3x EBITDA); IVECO to be EPS-accretive from Day-1; TTMT targets ~20% RoCE for combined entity. 5) Sales at JLR start; production slated to commence soon. Sep retails not affected, though some liquidity impact expected due to production halt. For JLR, US market remains resilient, China is holding up, and UK, EU are stable. We retain BUY on TTMT and TP of Rs750.

Key highlights from the analyst meet

CVs: The mgmt upgraded its FY25-30 BTKM CAGR outlook to 6-8% (from 5-7%), led by recent GST cuts amid expectation of demand revival, given better consumption. The mgmt expects double-digit volume growth in H2 (incl in SCVs). Pricing discipline intact, with sustained margin focus. GST cuts to lower opex by 1-2% for fleet operators, mainly via tyres/lubricants/parts, directly aiding the bottom-line. 60-70/40% of TTMT’s heavy trucks/LCVs are B2B and will take a hit from the GST cut; smaller CVs to benefit. IVECO: IVECO brings global scale/technology leadership in CVs, ADAS, SDVs, and telematics, while TTMT offers India stronghold/cost-competitive manufacturing. Revenue synergies expected from the expanded product range, Europe/LatAm entry, TTMT’s India presence. EU exposure concerns captured in valuations (2.3x EBITDA). IVECO to be EPS-accretive from Day 1; to generate strong FCF; targets 20% RoCE, in line with TTMT’s profitable growth strategy. IVECO to lower opex via design-to-value, frugal engineering. PVs: From 5-Sep till Navaratras, TTMT saw 25-30% bookings growth (20% for industry); expects 7-8% YoY H2 growth, ie sub-5% FY26 PV industry growth. The post-Covid surge in usedcar buyers is now settling, supporting small-car demand. Discounts to be elevated in Q3, for pushing volume; SUVs also seeing discounts across OEMs. The mgmt noted stabilization in PV industry mix vs rapid SUV growth earlier. TTMT may hike prices in Jan26 on commodity pricing pressure, though aims to preserve profitability via operating leverage, richer product mix. Its PVs see minimal cess impact as most of the portfolio is sub-0.1mn. JLR: Q1 saw tariff impact; worries now behind, with deals of EU/UK and US in place. JLR’s sales commence; production to begin soon. While Sep retails unaffected, wholesales to be managed; some liquidity hit expected due to production halt. Despite geo-political issues, the US market is resilient, China is holding up, and EU/UK are stable.

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