The share price of Tata Motors climbed nearly 4% in early trade on Wednesday, emerging as the top performer on the Nifty 50. This upward momentum in the Tata Motors share price comes on the back of strong shareholder support for its plan to demerge the commercial vehicle (CV) business into a separate listed entity.
As per an exchange filing, 99.99% of its shareholders voted in favour of the split, giving a near-unanimous nod to the restructuring move that was first floated in March last year.
Two separate paths for growth
With the demerger plan now approved, Tata Motors will soon operate as two distinct entities. As part of this demerger plan, one entity will be focused on its commercial vehicle portfolio and the other on passenger vehicles, including its UK-based luxury brand Jaguar Land Rover (JLR). Each existing shareholder will receive one share of the demerged company for every share they currently hold.
Trade push from the UK
Adding further fuel to the rally was the announcement of the India-UK Free Trade Agreement signed Tuesday evening. Under the deal, import tariffs on premium cars will drop significantly from over 100% to 10% under a quota system. While the exact quota limit is still unclear, the development is seen as a major positive for JLR, which stands to benefit from increased access to the Indian luxury car market.
Tata Motors share performance
Tata Motors has seen a mixed journey on the stock market over different timeframes. In the last five days, the share price of Tata Motors delivered a modest 3% gain, while on a one-month basis, it surged 15%. However, the broader picture shows some challenges. Over the past six months, the stock has dropped 18%, and on a year-on-year basis, it is down by 32%. Year-to-date, the decline stands at 11%. Despite the volatility, Tata Motors maintains a strong market capitalisation of Rs 2.46 lakh crore. The company’s stock has touched a 52-week high of Rs 1,179.00 and a low of Rs 535.75.