Introduction to the Demerger
Shares of Tata Motors Ltd. commenced trading today, adjusted to reflect the demerger of the company’s Commercial Vehicles (CV) business. A specialized pre-open price discovery session initially valued the existing listed entity at ₹400 per share. However, once regular trading resumed, the stock experienced a decline.
Today marks the official record date for the demerger, a significant corporate event that has attracted detailed analysis from financial research firms such as Nuvama Alternative and Quantitative Research.
Structure of the Demerged Entities
The Passenger Vehicle (PV) division, renamed Tata Motors Passenger Vehicles Ltd. (TMPVL), will encompass the domestic passenger vehicle operations, the prestigious Jaguar Land Rover (JLR), Tata Sons stake, Tata Steel, Tata Technologies, and other investments.
Conversely, the newly independent Commercial Vehicles business will include the domestic CV operations, the Iveco business—though its contribution is not included in price targets—and Tata Motors’ stake in Tata Capital.
Independent Valuations Post-Demerger
Following the separation, analysts have begun to assign independent valuations to the Passenger Vehicles and Commercial Vehicles segments. Below is a summary of the key brokerage forecasts:
Nomura’s Outlook
Nomura anticipates a nearly even split in the valuation between the two entities. The Commercial Vehicles business is valued at ₹365 per share, while the Passenger Vehicles business is estimated at ₹367 per share. According to Nomura, the Passenger Vehicle segment is experiencing positive momentum, buoyed by Goods and Services Tax (GST) reductions, festive demand, and pent-up consumer interest. The trend toward premium vehicles is particularly pronounced, with strong bookings for compact and micro SUVs such as the Punch and Nexon.
Goldman Sachs’ Perspective
Goldman Sachs highlighted a special trading session dedicated to determining the fair value of Tata Motors’ Commercial Vehicles business. The brokerage currently values the consolidated Tata Motors entity at ₹700 per share, comprising ₹236 for JLR, ₹436 for the Indian business—which is subdivided into ₹130 for Passenger Vehicles and ₹306 for Commercial Vehicles—and an additional ₹26 for Tata Technologies’ stake. Notably, Tata Technologies will be integrated within the Passenger Vehicles entity.
Nuvama’s Valuation
Nuvama expects the Commercial Vehicles business to be listed within the next 30 to 45 days. The brokerage assigns a value of ₹410 per share to the Passenger Vehicles business, broken down into ₹176 for India’s PV operations, ₹188 for JLR, ₹16 for the JLR China joint venture, and ₹33 for Tata Technologies’ stake. This valuation incorporates a 20% holding company discount. The Commercial Vehicles segment is valued at ₹280 per share, derived from ₹264 for India’s CV business and ₹14 for Tata Capital’s stake, also factoring in a 20% holding company discount.
Current Market Performance
Shares of Tata Motors Passenger Vehicles Ltd. are currently trading 2.1% higher, at ₹408.3, reflecting investor confidence in the newly structured entity.
