Tata Motors shareholders have given the green signal to the plan to split the company into two separate listed companies. This historic decision aims to operate the company’s businesses with greater efficiency and clarity, thereby providing better value to investors.Tata Motors had proposed in March 2024 that it would split its passenger vehicle (Passenger Vehicle – PV) and commercial vehicle (Commercial Vehicle – CV) businesses into separate listed companies. Now that the shareholders have approved, the company will start the further process. After the split, there will be two independent companies – one which will focus on the production and sale of passenger vehicles, and the other which will operate in the field of commercial vehicles.In this split, Tata Motors’ electric vehicle (EV) business and Jaguar-Land Rover (JLR) operations will come under the passenger vehicle unit, while truck, bus and other commercial vehicle businesses will remain in a separate unit.Analysts believe that Tata Motors has taken this decision so that both businesses get an opportunity to grow independently according to their nature. The needs, customer base and market strategies of the passenger vehicle and commercial vehicle business are quite different. Because of this, decision making and distribution of resources in an integrated structure sometimes becomes challenging.The proposal received overwhelming support from shareholders. Analysts believe that this will lead to better valuation of both the units in the market, which will provide clarity and transparency to investors. The news also had a positive impact on the stock market and Tata Motors shares registered a gain.Brokerage firms believe that this division will help unlock the value of the company. Tata Motors’ leading position in the passenger vehicle business, especially electric vehicles, can attract investors. At the same time, the commercial vehicle business can create a distinct identity due to its stable income and market hold.Now that the shareholders have approved, the company will start the process of obtaining approval from regulatory agencies. This will include approval from the National Company Law Tribunal (NCLT) and market regulator SEBI. The company aims to fully implement this division by the financial year 2025-26.Talking on this, Financial Analyst, Anil Bhat said, “As of now, the share price of Tata Motors Limited is trading at ₹675.30 per share, showing a rise of 4.18% from the previous day’s close price. In the last one month, the stock has gained 16.48%. The stock’s 52-week high price is ₹1,179.00 per share, while its lowest price is ₹535.75 per share. The approval of this restructuring is a major shift in Tata Motors’ strategy. By splitting into two separate companies, the firm hopes to realise greater value and provide a clear growth path for its passenger and commercial vehicle businesses.”
Reporting to True to Life News