Shares of Tata Motors Ltd. recorded a notional fall from ₹660.75 apiece on Monday to ₹399 apiece on Tuesday as a demerger came into effect. Meaning, the 40% “decline” in Tata Motors’ share price today is a technical adjustment and not a material one.
After a one-hour pre-market session in Mumbai, Tata Motors shares started trading at ₹400 apiece for PV shares. The gap from Monday’s closing of ₹660.75 implies a valuation of ₹260.75 for the CV unit.
Indian exchanges have introduced these so-called special trading sessions in 2023 for companies undergoing a demerger to minimize market gyrations.
Tata Motors Demerger
The Tata Motors demerger, first announced in March 2024, aims to split and list the company’s passenger-vehicle and commercial-vehicle units.
After the demerger, Tata Motors Ltd. will be renamed Tata Motors Passenger Vehicles Ltd. to house all the car-making businesses including electric cars and Jaguar Land Rover. Tata Motors CV, which is India’s largest truckmaker, will then become Tata Motors Ltd.
Tata Motors shareholders will get one share in the spun-off CV unit for each held in the parent firm, implying that the two Tata Motors companies will have identical shareholding to begin with.
What’s trading today in essentially Tata Motors PV, before the name change. The listing of Tata Motors CV can take as long as 60 days.
India’s corporate affairs ministry has issued a new certificate to reflect the modified name for the passenger vehicles business.