Tata Motors share price rises after it demerges its CV and PV businesses into separate listed companies
The corporate demerger of Tata Motors will be implemented following an NCLT settlement, and all TML shareholders will retain identical shareholdings in both the listed entities.
Business demerger of Tata Motors: Tata Motors on Monday announced that its board has approved the proposal to demerge its commercial vehicle and passenger car businesses into two separate listed companies.
The commercial vehicle industry and the related investments become one whole; and the passenger car companies, including PV, EV and JLR, and their related investments will become a different entity.
The corporate demerger of Tata Motors will be implemented following an NCLT settlement, and all TML shareholders will retain identical shareholdings in both the listed entities.
Real estate agencies Tata Motors shares
Most market experts are positive about the news and also about the shares of TATA Motors. However, UBS has maintained its previous sell rating on the stock, stating that the move simplifies the structure, but currently does not see any material value in the move, reports Zee Business.
The brokerage firm’s target price is Rs 600. On Monday, the company’s shares settled at Rs 987.20 on the BSE.
Motilal Oswal Financial Services (MOFSL) said that while the demerger appears to be a step in the right direction, “we do not foresee a need to revisit our target price, which is already based on SoTP’s valuation. Furthermore, despite taking into account most of the positive factors in our estimates, we get limited upside potential given the recent sharp rise in the stock price. Hence, we downgrade Tata Motors to Neutral (from Buy) with an unchanged TP of Rs 1,000 per share,” the brokerage added.
Tata Motors on split
“Over the past few years, Tata Motors’ Commercial Vehicles (CV), Passenger Vehicles (PV+EV) and Jaguar Land Rover (JLR) businesses have delivered strong performance by successfully implementing various strategies. As of 2021, these companies operate independently under their respective CEOs,” the company said in a press release.
Note that while there are limited synergies between commercial vehicles (CV) and passenger vehicles (PV), significant synergies can be leveraged between PV, EV and JLR, especially in the areas of electric vehicles, autonomous vehicles and vehicular vehicles. software, which will be secured by the split.
(Disclaimer: The above article is for informational purposes only and should not be considered investment advice.)