Tata Motors demerger: Will shareholders witness value unlocking? Analysts assess impact
Analysts claimed that Tata Motors’ move to split up its passenger and commercial vehicle businesses into two distinct companies is a “non-event” for the time being and might not result in any significant value being unlocked.
It may take up to 15 months to finish the procedure altogether, and analysts are still waiting on additional details.
At its meeting on March 4, the Tata Motors Board of Directors approved the proposal to demerge the company into two distinct listed companies. One of these companies will house the company’s Commercial Vehicles business and its related investments, while the other will house the company’s Passenger Vehicles businesses, including PV, EV, and JLR, as well as their related investments.
All Tata Motors shareholders would maintain the same percentage of shares in both listed companies following the demerger, which will be carried out through an NCLT scheme of arrangement, the automaker stated in a statement.
UBS claims that while Tata Motors’ demerger streamlines the organization, no meaningful value is revealed. With regard to Tata Motors, the brokerage firm has a “Sell” rating and a target price of ₹600 per share.
According to Morgan Stanley, the demerger shows the company’s faith in the PV segment’s ability to support itself and may improve Tata Motors’ ability to create value. ₹1,013 is the brokerage’s target price for the stock.
For the time being, Nuvama Institutional Equities sees the demerger as nonexistent.
