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Tata Motors PV share price falls over 5% after Tata Motors demerger takes effect
The Tata Motors demerger, first announced in March 2024, lists Tata Motors PV and Tata Motors CV separately to unlock the value of the EV and JLR businesses.
The Tata Motors demerger takes effect today to list the trucks and car units separately on India's stock exchanges. Tata Motors PV share price, pegged at ₹400 after a special pre-open price discovery session, fell as much as 5.53% to ₹376.90 apiece on the BSE.
After the demerger, the company will be renamed as Tata Motors Passenger Vehicles Ltd. and house all the car-making businesses including electric cars and Jaguar Land Rover. The newly carved out entity for India's largest truckmaker will then be called Tata Motors Ltd.
The new Tata Motors share price became active after a one-hour pre-market trading session from 9:00 am in Mumbai. The price discovered during this window helps determine the valuation of Tata Motors CV, based on the difference from Monday’s closing price.
Indian exchanges introduced these so-called special trading sessions in 2023 for companies undergoing a demerger to minimise market gyrations.
Brokerage Nuvama Wealth Management pegs Tata Motors CV's share price at ₹274 apiece for a market capitalisation of ₹1 lakh crore.
Tata Motors demerger
The Tata Motors demerger, first announced in March 2024, was aimed at unlocking value of the company's EV and JLR businesses. Tata Sons Chairman N. Chandrasekaran had pitched the demerger as a key step toward simplifying the group’s structure and aligning capital allocation with business priorities.
The company had set 14 October as the date for ascertaining shareholders who will be allotted shares in Tata Motors CV, according to an exchange filing last week.
Shareholders will get one share of Tata Motors CV for each held in Tata Motors Ltd., implying that the two Tata Motors companies will have identical shareholding to begin with. Listing the commercial-vehicles unit may take as long as 60 days, according to the company filing on 9 October.
JLR Headwinds
The demerger is kicking in at a delicate time for the automaker as its luxury car unit navigates one headwind after another.
JLR earlier this year was grappling with US tariffs on the UK-made vehicles. In recent weeks, it has been hit by a cyberattack that forced it to shut down factories worldwide, requiring a emergency government bailout. Last week, JLR restarted production at some sites.
Tata Motors shares closed 2.7% lower at ₹660.75 on Monday—the seventh straight trading session when it posted a decline. The stock has fallen about 29% over the last one year, compared with a 1% gain in the benchmark NSE Nifty 50 index.
Tata Motors, meanwhile, has been bolstering its commercial vehicles arm. It acquired Italy’s Iveco Group NV in July in a €3.8 billion ($4.4 billion) all-cash deal that will give it a larger global footprint.
