Tata Motors At All-Time High: What Brokerages Think About The Demerger

Tata Motors‘ share price jumped back into the green on Tuesday morning. The stock jumped up over 4% to hit a new all-time high of ₹1,027.

What Happened: The Tata Group company on Monday announced its plan to demerge its businesses into two distinct listed entities: one for commercial vehicles and the other for passenger vehicles. This demerger will be executed through an NCLT scheme of arrangement.

Analyst Reactions: After the news, most brokerages maintained their upbeat stance on the stock. Morgan Stanley maintained its “overweight” rating for the stock with a price target of ₹1,013. The analysts said that the demerger decision reflects the company’s confidence in the passenger vehicle section to be self-sustaining.

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JP Morgan also maintained its “overweight” rating for the stock with a price target of ₹1,000. The research firm said that the demerger might lead to better value discovery.

Nomura also maintained its “buy” rating for the stock with a price target of ₹1,057. The brokerage said that in the medium term, the business should be able to pursue respective strategies.

Macquarie also maintained its “outperform” rating for the stock with a target price of ₹1,028. The brokerage said that the pure play spin-offs will lead to better value discovery.

Motilal Oswal downgraded the stock’s rating from “buy” to “neutral” with a target price of ₹1,000. The domestic brokerage said that the decision to demerge seems to be a step in the right direction. The brokerage said that the downgrade was done because of the recent sharp run-up in Tata Motors’ share price.

Price Action: Tata Motors’ share price was up 2.70% to trade at ₹1,013.90 as the markets opened on Tuesday.

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