According to Abhilash Pagaria, head of alternative and quantitative research at Nuvama Institutional Equities, the decision by automaker Tata Motors to demerge its businesses into two distinct listed entities—the commercial vehicles (CV) and passenger vehicles (PV) businesses—is a "non-event" as of right now because the process is expected to be finished within the next 12 to 15 months.
| Company | Value | Change | %Change |
|---|---|---|---|
| Tata Motors | 1,050.80 | ₹63.60 | 6.44 |
| UPL | 484.10 | ₹9.85 | 2.08 |
| M&M | 1,955.10 | ₹34.05 | 1.77 |
| Bajaj Auto | 8,315.00 | ₹107.70 | 1.31 |
It gave the recent demerger of Jio Financial Services Ltd. from Reliance Industries Ltd. (RIL) as an example. It stated that Jio Financial was listed separately and subsequently was taken out of the domestic indices throughout the following few days.
.webp "Tata-Motors")
Effect on FTSE and MSCI flows
Nuvama states that the smaller entity's eligibility will be determined by the global indices, such as MSCI and FTSE, based on an assessment of its market capitalization surrounding listing. "Assuming the CV business gets around 25% of the total market cap, we believe it should maintain its position in the passive indices," it stated.
The market capitalization (total and free float) of Tata Motors shares and the worldwide cutoff levels will be crucial variables, the report stated.
Furthermore, the broking business mentioned the DVR (Differential Voting Rights) merger process with ordinary shares, which was announced in July of last year, and stated that the demerger process will align with the DVR merger process with Tata Motors (Ordinary shares). Nuvama anticipates that the procedure will be finished in the next six to eight months.
The demerger of Tata Motors' corporate operations into two distinct businesses was authorized by the board on Monday. Every Tata Motors shareholder would keep owning the exact same number of shares in each of the two listed companies.
The demerger of Tata Motors' corporate operations into two distinct businesses was authorized by the board on Monday. Every Tata Motors shareholder would keep owning the exact same number of shares in each of the two listed companies.
Following the demerger, the PV business—which includes PV, electric cars, Jaguar and Land Rover, and related investments—would be housed in one company, while the CV business and its connected investments would be housed in the other.
According to Tata Motors, an NCLT scheme of arrangement will be used to carry out the demerger. The approval of the NCLT proposal by the Tata Motors board, shareholders, creditors, and regulators might be obtained in a span of 12 to 15 months.
According to Tata Motors, an NCLT scheme of arrangement will be used to carry out the demerger. The approval of the NCLT proposal by the Tata Motors board, shareholders, creditors, and regulators might be obtained in a span of 12 to 15 months.
On the NSE on Monday, Tata Motors' shares closed 0.056% higher at ₹988.90. The stock has increased by 25% so far this year and by 125% over the previous year.