CNBC TV18
By Priyanka Deshpande
Published March 4, 2024
Tata Motors on March 4, 2024 the demerger of the company into two separate entities. If you are a Tata Motors shareholder, here are the key things you need to know:
The commercial vehicles business and its related investments would be housed in one entity.
What has Tata Motors said?
The passenger vehicles businesses, including PV (passenger vehicles), EV (electric vehicles), and JLR (Jaguar Land Rover), and their related investments would be part of another entity.
The demerger will be implemented through an National Company Law Tribunal (NCLT) scheme of arrangement.
How will it be done?
Tata Motors shareholders shall continue to have identical shareholdings in both of the listed entities.
What's in it for Tata Motors shareholders?
What has the management said about Tata Motors' demerger plan?
In 2023, Tata Motors was the top Nifty performer, doubling its stock value. Among 34 analysts covering the company, 26 recommend "buy," five suggest "hold," and three give it a "sell" rating. The stock is trading above its 12-month consensus price target of ₹951.22.
Tata Motors share price performance
Market expert Prakash Diwan to CNBC-TV18: "This is absolutely a very smart thing and very timely. Both of these businesses need a very different mindset; this kind of separation gets them to make a two plus two is five kind of growth, the agility that it gives.”
How have market experts reacted to the demerger plan?
“The PV segment is going to be great on a standalone basis. This is a precursor to the balance sheet becoming net debt-free, which they promised by March. Both of them will get different PE multiples; you can choose what you want to put your money into.”
“I think the PV segment business will get a far higher multiple, and there will be a lot of value creation from that perspective."
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