Tata Motors shares top gainers on Nifty 50 index after unanimous vote to demerge CV business

Shares of Tata Motors have opened 1.5% higher on Wednesday, May 7, to two developments that have taken place over the last 24 hours. The stock is the top gainer on the Nifty 50 index. The stock since, has extended its gains to 4%.

The first development that the shareholders of the company gave a near consensus approval to demerge the Commercial Vehicle business of the company into two separate, listed entities.

The exchange notification shared by Tata Motors on Tuesday evening showed that the proposal to demerge the CV business received 99.99% of the votes polled in favour.
Tata Motors had announced in March last year, that it intends to separate the Commercial Vehicle division into a separate entity. With this approval, shareholders of Tata Motors will be eligible to receive one share of the demerged entity for every one share of the currently listed shares that they own.

The other development that has taken place is the India-UK Free Trade Agreement that was signed last evening, under which, automotive tariffs will go from over 100% to 10% under a quota. This will have a significant impact on premium auto imports, although it remains unclear that what the quota is.

This could be beneficial for stocks like Tata Motors, as this could result in a boost to its unit Jaguar Land Rover’s sales in the country. JLR is based out of the UK.

Among the 34 analysts that have coverage on Tata Motors, 20 of them have a “buy” rating, eight say “hold”, while six have a “sell” rating.

Shares of Tata Motors are trading 3.6% higher on Wednesday at ₹671.4. The stock has risen 11% over the last one month.