Tata Motors announce demerger of PV and CV Businesses.

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On March 5, 2024, Tata Motors made an announcement to separate its passenger vehicle (PV) and commercial vehicle (CV) businesses into separate entities. 

This decision was welcomed by most brokerages, who see great potential for both businesses to create more value and have greater strategic flexibility.  

JP Morgan assigned an “overweight” rating and a price target of Rs 1,000, indicating a potential upside of 1.2%.  

Morgan Stanley praised the demerger, considering it as a sign of confidence in the PV segment’s potential, and assigned a target price of Rs 1,013.  

They also said that there could be synergies between Jaguar Land Rover and the domestic PV business, especially in the electric vehicle (EV) space. Nomura issued a “buy” call with a target price of Rs 1,057, representing a 7% upside. 

They believe that the demerger will allow both businesses to pursue their individual strategies more effectively, especially the PV segment with its strong growth potential. 

InCred issued a “reduce” call, anticipating valuations favoring the PV business at 62% post-demerger, with the remaining 38% going to the CV segment. 

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