Tata Motors shares soared to a 52-week high during early trading on Tuesday, buoyed by the company's revelation of a demerger proposal approved by its board.
Earlier in the trading session, Tata Motors shares witnessed an impressive 8 percent surge, reaching Rs 1,065.60 each. By 11:30 am, the automotive giant's stock had climbed 4.25 percent to Rs 1,027.40 per share on the Bombay Stock Exchange (BSE).
On the preceding day, Tata Motors made public its intention to split its operations into two distinct entities, as per an official exchange filing.
The board of directors has granted approval for this strategic move, which entails the bifurcation of Tata Motors' activities into two standalone companies.
One of these entities will focus on commercial vehicle operations and associated investments, while the other will oversee the passenger vehicle segment, encompassing PV, EV, JLR, and related investments.
The company has outlined that the demerger process will be executed via the National Company Law Tribunal (NCLT) scheme of arrangement, ensuring that all existing shareholders maintain their ownership in both resulting listed entities.
N Chandrasekaran, the chairman of Tata Motors, emphasized the anticipated benefits of this demerger, stating that it will enhance the company's ability to capitalize on market opportunities by fostering a sharper focus and enhanced agility. He emphasized that this strategic move would ultimately translate into superior customer experiences, improved growth prospects for employees, and increased value for shareholders.
It is noteworthy that Tata Motors shares have demonstrated a robust performance this year, witnessing a nearly 30 percent increase on a year-to-date (YTD) basis. Over the past month, the stock has surged by over 11 percent, and in the last six months, it has recorded an impressive gain of nearly 69 percent.
After the demerger announcement, several brokerage firms expressed optimistic views regarding its potential to generate additional value for stakeholders.
