Tata Motors Demerger: Tata Motors’ business split into two parts, Nomura, Goldman Sachs, and Nuvama reveal which is more powerful.
Tata Motors Ltd. shares are trading on an adjusted basis after the demerger, separating the commercial vehicle (CV) unit. Shares of Tata Motors Passenger Vehicles Ltd (TMPVL) settled at ₹400 per share on the NSE on October 14th. This represents a decline of approximately 39.5% (₹260.75) from the previous closing price. This adjustment was made following the demerger of the company’s commercial vehicle business.
Nomura’s analysis shows the value of both companies to be approximately equal. Nomura stated in its report that the value of both companies will be approximately equal after the demerger. The brokerage has valued the commercial vehicle unit at ₹365 per share and the passenger vehicle unit at ₹367 per share.
Nomura wrote in its note that the PV business has seen a surge in bookings after the GST cut. Demand for micro-SUVs like the Punch and Nexon, in particular, has accelerated growth in the premium segment. The brokerage believes that the performance of the Tata Motors PV unit will remain strong in the coming quarters due to the festive season and pent-up demand.
Goldman Sachs: Total value ₹700 per share, CV largest Goldman Sachs has fixed the overall value of Tata Motors at ₹700 per share, in which the contribution of different segments is as follows.
JLR: ₹236 per share
India Business: ₹436 per share (includes PV ₹130 and CV ₹306)
Tata Technologies stake: ₹26 per share
Goldman believes the CV segment will remain a value driver for Tata Motors, while the PV unit’s strength will be enhanced by its stake in JLR and Tata Tech. The brokerage wrote, “A special trading session will be held for fair value discovery of TML Commercial Vehicles to ensure an independent value of both companies is determined transparently.”
Nuvama Research: PV estimated at ₹410 and CV at ₹280 per share – Nuvama Alternative & Quantitative Research has calculated the independent value of both new companies.
