Tata Motors Commercial Vehicles said on Wednesday it would absorb a significant part of the ongoing commodity cost increase rather than pass it on to customers, even as raw material inflation in the current quarter has surpassed the elevated levels seen in the March quarter. The move comes after the company reported a 70 per cent jump in March quarter profit after tax to ₹2,406 crore and record free cash flow of ₹9,186 crore for FY26, signalling that it is prioritising volume momentum over near-term margin protection.

“We have taken a price increase of around 2 per cent effective April 1. For the rest, we have decided not to pass through and will work on other cost levers to manage the situation, because we do not want to disturb the growth momentum,” Girish Wagh, Managing Director and CEO, Tata Motors, said during the company’s post-results analyst and media call. “The commodity increase has been quite severe.”

The decision is significant at a time when automakers across segments are weighing additional price increases to offset higher costs. For fleet operators and transporters, Tata Motors’ stance offers near-term relief, while indicating that the country’s largest commercial vehicle maker sees greater value in preserving the truck replacement cycle than in fully protecting margins.

Responding to a question on the government’s decision to nearly double import duties on platinum, Wagh said the immediate impact would be limited relative to the broader inflationary pressures already affecting the industry.

“The duty has gone up, but the overall impact of platinum duty increase and the resulting cost increase is not going to be as significant compared to the other commodity increases we are facing, which are in steel, aluminium, rubber and other precious group metals,” he said. Wagh said input costs rose by about 100 basis points in the March quarter and that the pressure has intensified further in the June quarter.

He added that diesel remains a critical variable for fleet operators because, depending on the segment, it accounts for roughly 25 to 50 per cent of a truck’s total cost of ownership, making fuel-price movements a key determinant of replacement demand.

Demand intact, sentiment more cautious

Despite the cost pressures, Wagh said underlying demand remains strong. April volumes posted healthy double-digit year-on-year growth across all segments, supported by robust freight availability and sustained e-way bill activity.

At the same time, he acknowledged that customers are becoming more circumspect. “Sentiment is a bit cautious, customers may be thinking twice—but since the demand is there, they are going ahead with purchases,” he said.

For FY27, Wagh said the domestic commercial vehicle industry is likely to grow in the single digits, with the outlook dependent on diesel prices, the trajectory of the Middle East conflict and the strength of the monsoon. He noted that since GST rate rationalisation took effect in September, underlying demand has remained robust and April data showed no signs of a structural slowdown.

Strong balance sheet, cautious operating stance

Despite the strong FY26 outturn, Wagh signalled that Tata Motors is entering FY27 with a more cautious posture. The company has introduced austerity measures, including tighter controls on travel and other discretionary spending, from the start of the financial year. Capital expenditure will remain within the planned range of 2–4 per cent of revenue, although the timing of some investments may shift depending on market conditions.

The company ended FY26 with record free cash flow of ₹9,186 crore, domestic net cash of ₹7,500 crore and a consolidated net cash position of ₹13,713 crore, providing substantial financial flexibility as it prepares to complete the acquisition of Italian truck maker Iveco.

Product momentum and FY27 priorities

Wagh said Tata Motors enters FY27 with clear priorities: scaling its next-generation truck portfolio and battery electric vehicle range, driving profitable market share growth, consolidating gains in small commercial vehicles and accelerating non-cyclical business growth.

During FY26, the company launched 17 next-generation trucks, introduced the Ace Pro range—described as India’s most affordable four-wheel mini-truck, secured its largest-ever export order for 70,000 Yodha and Ultra T.7 vehicles for deployment in Indonesia, and won pan-India orders for more than 5,000 buses from State Transport Undertakings.

Electric vehicles are expected to play a larger role in FY27. Wagh said EV penetration in Tata Motors’ small commercial vehicle portfolio has already reached around 6–7 per cent, and that the company expects adoption to accelerate across trucks and buses as customers become more familiar with the economics of electric fleets.

Iveco acquisition nears closure

On the proposed ₹41,691 crore acquisition of Iveco, Wagh said all anti-trust, FDI and European Union approvals have been secured, with only financial regulatory clearances in France and Spain are still pending.

The company expects to complete the transaction around mid-Q2 FY27, after which full financial consolidation and integration will begin.

The Board has recommended a final dividend of ₹4 per equity share of face value ₹2 each for FY26, subject to shareholder approval at the annual general meeting scheduled for June 29, 2026

Tata Motors Commercial Vehicles (TMCV) shares on the BSE closed 0.72 per cent lower at ₹384.40 on Tuesday.

Published on May 13, 2026