Tata Motors Commercial Vehicles demerged stock gets listed at a premium on exchanges

Before the demerger record date, Tata Motors’ consolidated stock traded at Rs 660 per share. With the PV business listed at Rs 400, the implied value of the CV business was estimated at Rs 260 per share, although the actual listing price surpassed that level.

Tata Motors is now India’s largest commercial vehicle manufacturer, with a diversified presence across small cargo carriers, light commercial vehicles, and medium & heavy commercial vehicles (M&HCVs). (Credit: https://www.tatamotors.com/commercial-vehicles/)

Shares of the demerged commercial vehicles (CV) business of the erstwhile Tata Motors Ltd debuted on the bourses on Wednesday, listing as Tata Motors Ltd (TML) at Rs 335 per share, marking a 28 per cent premium to its pre-open price discovery level of Rs 260 per share.

The listing comes a month after the parent entity, now renamed Tata Motors Passenger Vehicles Ltd (TMPV), began trading on the bourses. Shares of TMPV were listed at Rs 400 per share after a special pre-open price discovery session and continue to trade around the same level even a month later. The TML stock closed at Rs 327.65 on the BSE on Wednesday.

TMPV shares closed at 402.30, down by 1.28 per cent.

Before the demerger record date, Tata Motors’ consolidated stock traded at Rs 660 per share. With the PV business listed at Rs 400, the implied value of the CV business was estimated at Rs 260 per share, although the actual listing price surpassed that level.

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Tata Motors is now India’s largest commercial vehicle manufacturer, with a diversified presence across small cargo carriers, light commercial vehicles, and medium & heavy commercial vehicles (M&HCVs). The demerged entity also includes the recently acquired Iveco Group NV, whose integration is expected to be completed by FY27.

Tata Motors had first announced plans to demerge its commercial vehicle business into a separate listed company in 2023. Shareholders holding Tata Motors shares as of the demerger record date received one share of the CV business for every one share held.

Following approvals from the BSE and NSE, Tata Motors confirmed in an exchange filing earlier this week that its CV business would list on Wednesday, marking the completion of one of the most significant restructurings in the Tata group’s automotive history.