Tata Motors shares fell nearly 40% as the stock began trading ex-demerger, but investors need not panic. The decline reflects the technical adjustment after the Tata Motors demerger stocks separated the commercial vehicle unit from the passenger vehicle business.
The stock opened at Rs 399, down from Rs 660.90, valuing the company at around Rs 1.45 lakh crore. However, the market value remains the same as shareholders will receive equal shares in both entities.
Key Takeaways
- Tata Motors’ 40% drop is a technical effect of the Tata Motors demerger stocks, not a real loss.
- Investors will receive equal shares in both new entities.
- TMPVL will handle passenger and EV businesses, while TMLCV will focus on commercial vehicles.
- Listing of TMLCV expected within 4-6 weeks, possibly by mid-November.
- The Tata Motors demerger stocks aim to create focused growth and unlock long-term value for investors.
Why Does Tata Motors Shares Dropped?
The drop in Tata Motors’ share price is not due to performance concerns but a technical adjustment following the Tata Motors demerger stocks. Under the plan, investors will receive one share of Tata Motors Commercial Vehicles Limited (TMLCV) for every Tata Motors share held on October 14.
This means the company’s value is now split between Tata Motors Passenger Vehicles Limited (TMPVL) and TMLCV. TMPVL will focus on passenger vehicles, EVs, and Jaguar Land Rover (JLR), while TMLCV will handle the commercial vehicle business.
What Happens Next?
TMLCV shares will start trading once they receive listing approval, usually within 45-60 days. Until then, TMPVL shares will continue trading under the new structure. The old derivative contracts expired Monday, and new ones began Tuesday.
There is No Need to Panic
Investors still hold the same total value, split across two entities after the Tata Motors demerger stocks. For every 100 shares in Tata Motors, shareholders now own:
- 100 shares in Tata Motors Passenger Vehicles Limited
- 100 shares in Tata Motors Commercial Vehicles Limited
