Tata Motors Demerger Value Analysis: After the demerger of Tata Motors, its two new shares PV and CV units are trading separately. Now the question in the minds of investors is which stock can perform better? Know what brokerage houses are saying…
Tata Motors Demerger Share Price: The demerger of Tata Motors has now been finalized. From today, October 14, its two divisions Tata Motors Passenger Vehicles Limited (TMPVL) and Tata Motors Commercial Vehicles (TMLCV) have started trading separately. Now the biggest question before investors is that which of these two is better and which can give higher returns? Let us know what is the opinion of brokerage houses and the mood of the market?
What changed after Tata Motors demerger?
On October 14, Tata Motors Passenger Vehicles Ltd settled at Rs 400 per share on the NSE, down about 39% from its previous closing. This decline is actually a part of adjusted value based trading, that is, now the market is finding the respective values of both the units. After demerger, Tata Motors will now run on two paths, first passenger vehicle (PV) and EV business, second commercial vehicle (CV) business.
What is the value of TMPVL vs TMLCV?
Brokerage firm Nomura has said in its latest analysis that the value of both the companies will be almost equal. The value of PV unit will be Rs 367 per share and the value of CV unit will be Rs 365 per share. According to the brokerage, the PV segment will see a boost due to GST cut and festive season demand, especially due to strong sales of SUVs like Punch and Nexon. The brokerage believes that Tata Motors PV unit can show surprising growth to the market in the coming quarters.
How much will the value of Tata Motors shares go?
Global brokerage firm Goldman Sachs has estimated the total value of Tata Motors at Rs 700 per share. In this, JLR- Rs 236, India Business contributed Rs 436 (PV Rs 130 and CV Rs 306), Tata Technologies contributed Rs 26. According to Goldman, the CV unit will prove to be the real value driver of the company. At the same time, the strength of the PV unit will further increase with the stake in JLR and Tata Tech. The brokerage said that a special trading session will soon be organized for fair value discovery of both the companies, so that their independent prices can be decided transparently.
What does the market mood say about Tata Motors share?
Ahead of the record date of demerger, Tata Motors shares fell 2.2% and recorded a slight decline at Rs 400 in the pre-open session. Analysts believe that this is just a short-term adjustment. Demerger will create a huge opportunity for value unlocking. The PV/EV unit will focus on the rapidly growing electric vehicle market. At the same time, the CV unit will benefit from the recovery of the infrastructure and logistics sector.
Tata Motors: Which stock will give better returns?
The common point of both the brokerages (Nomura, Goldman) is clear that the demerger of Tata Motors is a masterstroke towards value creation. Short-term traders can benefit from festive demand in PV shares. At the same time, for long-term investors, CV unit can become a big growth engine with infrastructure boom.
Disclaimer: The information given in this article is for general information only. Any company, stock or investment opinion expressed here is based on brokerage reports. We are not advising any investment, buying or selling. Investing in the stock market is subject to risks, please consult your financial advisor before investing.
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