Published - 06 March 2024
The share price of Tata Motors, India’s largest automaker by market cap, hit a 52-week high as it announced its plan to demerge into two separate entities.
One of the demerged entities will house the commercial vehicles business. The other will comprise passenger vehicles, including electric vehicles and Jaguar Land Rover.
Historically, passenger vehicles have been the key growth driver. In the last 12 months, passenger vehicles contributed 81% to total revenue (cont.)
The demerger will help management focus on each business independently to unlock value and capitalise on emerging opportunities, especially in the EV.
Shareholders will have identical shareholding in the demerged entities; for each share held in Tata Motors, they will receive one share of the new entities.
The management has yet to provide any specific timeline for the demerger. It has also not commented on which entity will house Tata Technologies and Freight Tiger.