SYNOPSIS:
Tata Motors’ 1:1 demerger splits passenger and commercial vehicle units, with TMPVL and TMLCV separately listed; brokerages provide independent valuations, highlighting growth, premiumization, and upcoming trading adjustments for investors.
During Tuesday’s trading session, shares of Tata Motors Limited, a leading global automobile manufacturer and part of the multi-national conglomerate Tata Group, witnessed a sharp decline of nearly 40 percent, hitting an intraday low of Rs. 376.3 on NSE.
In August 2024, the company’s board had approved the demerger of its commercial vehicle (CV) and passenger vehicle (PV) businesses into two separate listed entities. This strategic move aims to sharpen business focus, enhance operational efficiency, and unlock future growth potential across both verticals.
Following the demerger, the PV division will operate under the name Tata Motors Passenger Vehicles Ltd. (TMPVL), while the CV arm will continue as Tata Motors Ltd. (TML), which is scheduled to be listed separately in November.
The 1:1 demerger will result in the creation of two distinct and focused entities, i.e., Tata Motors Commercial Vehicles Ltd. (TMLCV) and Tata Motors Passenger Vehicles Ltd. (TMPVL). Earlier this month, the company announced 14th October as the record date for the demerger. From this date onward, Tata Motors shares began trading ex-demerger, reflecting the adjustment for the separation of the company’s CV business.
According to the demerger scheme, shareholders holding Tata Motors shares as of the record date will be eligible to receive 1 share of the newly formed TMLCV for every 1 share of Tata Motors they own. The shares of TMLCV are expected to commence trading on the BSE and NSE in November.
Following the demerger, several brokerage firms have begun to independently evaluate the PV and CV businesses of Tata Motors, providing separate valuations and growth outlooks for each segment.
(I) Nuvama Alternative and Quantitative Research has outlined several potential scenarios following the demerger. The PV unit, to be named Tata Motors Passenger Vehicles Ltd. (TMPVL), will comprise the domestic PV business, Jaguar Land Rover (JLR), and stakes in Tata Sons, Tata Steel, and Tata Technologies, along with other strategic investments.
The demerged CV unit will include the domestic CV business, the Iveco business – whose contribution is not reflected in current price targets – and the stake held in Tata Capital.
(II) Goldman Sachs highlighted that a special trading session will be conducted to determine the fair value of the Tata Motors CV entity. It further noted that, the Tata Technologies stake will be part of the PV entity.
The brokerage estimated the consolidated Tata Motors business at Rs. 700 per share, comprising Rs. 236 for JLR, Rs. 436 for the India business (which includes Rs. 130 for PV and Rs. 306 for CV), and Rs. 26 per share for the company’s stake in Tata Technologies.
(III) Nomura stated that following the demerger, the price targets for the two entities are almost evenly split. The brokerage values the CV entity at Rs. 365 per share and the PV entity at Rs. 367 per share.
It noted that momentum for the PV business has strengthened following the GST cuts, as festive and pent-up demand boosted sales. Nomura highlighted that the premiumization trend remains strong, with a notable increase in bookings for compact and micro SUVs, including the Punch and Nexon.
(IV) Nuvama stated that the CV business is expected to be listed within the next 30 to 45 days.
The brokerage valued the PV business at Rs. 410 per share, broken down as Rs. 176 for the India PV business, Rs. 188 for JLR, Rs. 16 for the JLR China joint venture, and Rs. 33 for the stake in Tata Technologies, incorporating a 20 percent holding company discount.
The CV business is valued at Rs. 280 per share, comprising Rs. 264 for the India CV business and Rs. 14 for the stake in Tata Capital, also factoring in a 20 percent holding company discount.
Written by Shivani Singh
Disclaimer

The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
The post Tata Motors Demerger: How Goldman Sachs and other brokerages value the newly formed PV and CV entities appeared first on Trade Brains.