Following Tata Motors’ decision to split its passenger and commercial vehicle businesses, its shares rose by 4 percent, reaching a 52-week high of Rs 1,027 on March 5th. This move was warmly received by both brokerages and investors.
JP Morgan, among others, assigned an “overweight” rating to the stock with a price target of Rs 1,000, indicating a 1.2 percent upside from the previous close. Similarly, Morgan Stanley expressed confidence in the decision, stating that it reflects Tata Motors’ belief in the sustainability of the personal vehicle segment, potentially leading to enhanced value creation.
Morgan Stanley also highlighted potential synergies between Jaguar Land Rover and the domestic PV business in the electric vehicle (EV) domain. Nomura echoed these sentiments, issuing a “buy” call with a target price of Rs 1,057, foreseeing favorable outcomes for both businesses post-demerger.
However, not all brokerages share the same enthusiasm. Investec maintained a “hold” rating, expecting minimal impact on valuations, while InCred issued a “reduce” call, noting that post-demerger, valuations may tilt in favor of the PV business.
The proposed demerger will undergo an NCLT scheme of arrangement, with completion expected within 12-15 months. Despite this timeline, Tata Motors’ stock continued to rise, trading at Rs 1,030.55 on the National Stock Exchange as of 9:37 am.
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