Tata Motors demerger: Analysts' take and what shareholders need to know

Tata Motors demerger: On Monday (March 4, 2024), Tata Motors' board approved the proposal to demerge the automaker's businesses into two separate listed companies. One entity will be the commercial vehicles business and its related investments, and another will be the passenger vehicles businesses, including PV, EV, JLR, and their related investments. 

Further, the NCLT scheme of arrangement for the demerger shall be placed before the board for approval in the coming months and will be subject to all necessary shareholders, creditors, and regulatory approvals, which could take a further 12–15 months to complete. 

Moreover, the demerger will have no adverse impact on employees, customers, or our business partners, Tata Motors said.

Also read: Tata Motors to demerge CV and PV businesses into separate listed companies

Anil Singhvi view

Zee Business Managing Editor, Anil Singhvi said that Tata Motors'  PV, EV, and JLR's valuation is around Rs 715 whereas, CV valuations stand at Rs 315. The deal will unlock value and the stock can see an 3 to 4 per cent upmove in Tuesday's trading session as demerger news is positive for investors. Singhvi recommends buying and holding Tata Motors shares till they reach Rs 1,500/Rs 2,000 levels. 

#BigBreaking | Tata Motors का बड़ा डीमर्जर प्लान

Shareholders का होगा बड़ा फायदा 

कल कितना दौड़ेगा शेयर?#TataMotors #Demerger #TataGroup #StockMarketindia pic.twitter.com/ud8szrN2mF

— CA Anil Singhvi Zee Business (@AnilSinghvi_) March 4, 2024

Commenting on the development, Prashanth Tapse, Senior VP (Research), Mehta Equities, said the demerger news is a much-awaited strategic move and logical progression to further empower each segment and deliver higher growth with greater visibility. 

Tapse added that he sees high growth opportunities in PV, EV, and JLR, particularly in the areas of EVs, autonomous vehicles, and vehicle software, which this move will help secure a high focus. 

The expert said that the demerger will help the Tata Group company better capitalise on growth opportunities and enhance value for long-term shareholders. 

Tapse remains positive on Tata Motors from a long-term perspective. However, the expert added that the commercial vehicle business and its related investments would also be spun into one entity, like the vehicle financing business, Tata Technologies, etc., and it would be too early to comment on how this will look for the company. 

Shares of Tata Motors closed 0.12 per cent or Rs 1.2 lower at Rs 987.2 apiece in Monday's trade. 

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