The shares of Tata Motors jumped around 4 percent on October 14 after the stock adjusted to the demerger of its commercial vehicle business.
After opening at Rs 400 apiece following a special price-discovery session, the stock which now represents its passenger vehicle business, rose to Rs 415.80 apiece, as seen at 11.10 am.
Tata Motors demerger:
Earlier this month, the company fixed October 14 as the record date for determining which shareholders are eligible to receive shares in its demerged commercial vehicle business. This means that investors who held Tata Motors shares as on the record date will be eligible for the demerger scheme.
These shareholders will get one share of the demerged entity for every one share of Tata Motors they own. The shares of TML Commercial Vehicles Ltd (TMLCV) are likely to begin trading on BSE and NSE in November.
The demerger has already become effective from October 1. The stock adjustment took place today.
About Tata Motors demerger:
In August last year, Tata Motors’ board approved the demerger of its commercial and passenger vehicle divisions into two separate listed entities in order to sharpen business focus and capitalise on future growth opportunities.
Following the demerger, the passenger vehicle arm will be renamed Tata Motors Passenger Vehicles (TMPVL), while the commercial vehicles entity will be listed in November as Tata Motors (TML).
The 1:1 demerger will create two focused entities — Tata Motors Commercial Vehicles (TMLCV) and Tata Motors Passenger Vehicles (TMPV).
Tata Motors demerger: What analysts say?
Nomura:
Nomura values the commercial vehicles entity at Rs 365 per share, while it values the passenger vehicle entity at Rs 367 per share, according to CNBC-TV18. In its note, the brokerage said that the momentum for the PV business has picked up pace after the GST reforms as festive and pent-up demand came in.
"The premiumization trend remains evident, with a surge in bookings for compact and micro SUVs, including the Punch and Nexon," the firm said.
Goldman Sachs:
"We currently value the consolidated Tata Motors business at Rs 700 per share, which is made up of Rs 236 for JLR, Rs 436 per share for the India business, which comprises of Rs 130 for the Passenger Vehicles and Rs 306 for Commercial Vehicles, and another Rs 26 per share, for the company's stake in Tata Technologies," CNBC-TV18 quoted Goldman Sachs as saying.
There will be a special trading session for the discovery of fair value of Tata Motors Commercial Vehicles entity.
Nuvama:
Nuvama believes that the Tata Group company's CV business will be listed in the next 30 to 45 days. The brokerage has valued the passenger vehicle business at Rs 410 per share, which will be split as Rs 176 for the India PV business, Rs 188 for JLR, Rs 16 for the JLR China JV and Rs 33 for the stake in Tata Technologies, CNBC-TV18 reported. This valuation factors in a 20 percent holding company discount, it added.
Also read: Our LIVE blog on stock market updates
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
