Tata Motors Demerger: Why the Share Price Shows a 38% Drop Today

Mumbai, October 14: Tata Motors Limited’s share price is appearing 38.02% down today, on October 14. As of 1:00 PM, the shares were down by 38.02%, or 251.25, and were trading at ₹409.50. However, this significant fall is not a real monetary loss and will not have any effect on the investment value of shareholders. The fall is a result of the shares trading at the ex-demerger value.

Tata Motors Limited is an Indian company that manufactures and sells passenger and commercial vehicles. The company was established in 1945 and is headquartered in Mumbai, Maharashtra. The shares of the company are listed on NSE with the ticker symbol TATAMOTORS and on BSE with the code 500570.

Shares Adjusting to Demerger

The shares of Tata Motors are trading at their ex-demerger value today following the separation of its commercial vehicles business into a new listed company, Tata Motors Commercial Vehicles Ltd (TMLCV). The parent company has been renamed Tata Motors Passenger Vehicles Ltd (TMPV) and will now include passenger cars, electric vehicles and Jaguar Land Rover divisions. Shareholders holding shares on or before October 13 will receive 1 share of TMLCV for every 1 share of Tata Motors held. The fall in the share price comes after the resumption of trading for the commercial vehicles arm. However, it is now trading after being excluded from the parent company’s market value. Hence, the share price decline.

Shares of TMLCV will be credited to the demat accounts of eligible investors within 30 to 45 days. Afterwards, the company will be listed separately on the NSE and BSE once approvals are received. All existing F&O contracts for October, November, and December were settled yesterday and reintroduced today with revised lot sizes to match the new company structure.

Hence, from today onwards, TMPV’s stock price will represent only the passenger vehicles, electric vehicles, and Jaguar Land Rover businesses. On the other hand, TMLCV will reflect the commercial vehicles segment once it gets listed.

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