A share of the newly-demerged Tata Motors Commercial Vehicle (TMCVL) is awarded to shareholders who owned Tata Motors shares on the record date for each share held, as per the demerger plan, which set the demerger ratio at 1:1.
The merging of Tata Motors: Investor mood, which is now turning to the impending IPO of Tata Motors' commercial vehicle (CV) sector after its planned demerger from the passenger vehicle (PV) segment, is a clear reflection of the forward-looking nature of markets.The record date for the spin-off of Tata Motors' PV and CV division was Tuesday, October 14. A share of the newly-demerged Tata Motors Commercial Vehicle (TMCVL) is awarded to shareholders who owned Tata Motors shares on the record date for each share held, as per the demerger plan, which set the demerger ratio at 1:1.
Only the domestic PV (ICE+EV) and JLR businesses, as well as the investment in Tata Technologies Ltd., will be housed in the current portion of Tata Motors.
The CV business and other interests, including the holding in Tata Capital, will be held by the demerged company, TML Commercial Vehicle Ltd.
Only the domestic PV (ICE+EV) and JLR businesses, as well as the investment in Tata Technologies Ltd., will be housed in the current portion of Tata Motors.
The CV business and other interests, including the holding in Tata Capital, will be held by the demerged company, TML Commercial Vehicle Ltd.
What might the share price of Tata Motors Commercial Vehicles be?
Tata Motors PV shares traded at about ₹400 during Tuesday's one-hour pre-market session. In the meantime, the difference from Monday's closing price of ₹660.75 suggested that the TMCVL share price was valued at ₹260.75 per share.
According to the business, "the process of obtaining Listing and Trading permission generally takes 45-60 days from the date of filing the necessary application with Stock Exchanges." As a result, TMLCV shares will be listed on the markets by November.
According to Ambit Institutional Equities, the CV company is better positioned to benefit from the demerger because of its market leadership, industry-matching margins, and robust CFO creation.
"We anticipate that CV's value will unlock immediately, with the residual listed entity price settling at about ₹380 per share. Re-rating upside would come from the Iveco acquisition's global reach and synergies. "We're still buyers," it said.
Positive sentiment was also expressed by SBI Securities, which predicted that the domestic CV industry will begin to revive in 2HFY26 thanks to tailwinds such the GST rate drop on CVs from 28% to 18%, replacement demand, and uptick in the construction, logistics, and infrastructure sectors. According to their opinion, the demerged company will be exposed to the global CV cycle when Iveco Group NV is integrated, which is expected to happen in FY27.
"We anticipate that CV's value will unlock immediately, with the residual listed entity price settling at about ₹380 per share. Re-rating upside would come from the Iveco acquisition's global reach and synergies. "We're still buyers," it said.
Positive sentiment was also expressed by SBI Securities, which predicted that the domestic CV industry will begin to revive in 2HFY26 thanks to tailwinds such the GST rate drop on CVs from 28% to 18%, replacement demand, and uptick in the construction, logistics, and infrastructure sectors. According to their opinion, the demerged company will be exposed to the global CV cycle when Iveco Group NV is integrated, which is expected to happen in FY27.
In light of this, SBI Securities predicted that the share price of Tata Motors' commercial cars will trade between ₹320 to ₹470 after listing in November, which is higher than the implied price of ₹260.75.
The target price after the demerger, according to global stockbroker Nomura, is divided nearly evenly between the two businesses at ₹365 per share for the CV company and ₹367 per share for the PV entity.
"Festival and pent-up demand have sparked a surge in the PV business since the GST cut. With an increase in reservations for small and micro SUVs like the Punch and Nexon, the premiumization trend is still visible, it was concluded.
The target price after the demerger, according to global stockbroker Nomura, is divided nearly evenly between the two businesses at ₹365 per share for the CV company and ₹367 per share for the PV entity.
"Festival and pent-up demand have sparked a surge in the PV business since the GST cut. With an increase in reservations for small and micro SUVs like the Punch and Nexon, the premiumization trend is still visible, it was concluded.
With the support of the GST reduction, management anticipates that the CV business would expand by 5% in FY26F, which translates to a 10% rise in H2FY26. The Iveco acquisition, which will be funded initially by debt and then by 40% stock, will also be a part of the CV business starting in April 2026. According to the brokerage, we do not currently anticipate that this acquisition would result in any appreciable value creation.
Nomura stated that it will revise its projections if pro-forma financials are available following the findings, while maintaining its 'Neutral' rating.
What does the demerger of Tata Motors mean for the shares of TMPV?
Nomura stated that it will revise its projections if pro-forma financials are available following the findings, while maintaining its 'Neutral' rating.
What does the demerger of Tata Motors mean for the shares of TMPV?
According to Ambit analysts, the action generally advances the Tata Group's overarching goal of simplifying its organizational structure and increasing shareholder value via improved governance and transparency.
It did, however, warn of a significant price decline brought on by the CV business's separation.
Additionally, according to SBI Securities, the listed company Tata Motors Passenger car Ltd (TMPVL) is still vulnerable to the global passenger car market.
As of FY25, JLR accounts for 87% of the company's revenue, compared to only 13% for domestic businesses. The production disruption brought on by the cyberattack, the fierce competition in China, and the general slowdown in consumer spending in North America and Europe are just a few of the difficulties JLR is currently dealing with. Recovering JLR volumes and increasing profitability are still prerequisites for any possible stock increase," it continued.
Additionally, according to SBI Securities, the listed company Tata Motors Passenger car Ltd (TMPVL) is still vulnerable to the global passenger car market.
As of FY25, JLR accounts for 87% of the company's revenue, compared to only 13% for domestic businesses. The production disruption brought on by the cyberattack, the fierce competition in China, and the general slowdown in consumer spending in North America and Europe are just a few of the difficulties JLR is currently dealing with. Recovering JLR volumes and increasing profitability are still prerequisites for any possible stock increase," it continued.
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