1:1 Split Effect: Why Did Tata Motors Share Falls Below Rs 400? Nomura Sets PV & CV Targets After Demerger

Tata Motors share price is trading volatile since its 1:1 demerger record date. On October 15, this Tata Group-backed auto giant fell below Rs 400 on exchanges and has crashed by nearly 41% in two consecutive sessions. This loss in Tata Motors is not alarming, as the company is adjusting to demerger and investors will face temporary unrealized PNL till the listing of TML Commercial Vehicles. At the latest, Nomura is among the first brokers to assign new target prices on Tata Motors PV and CV entities.

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At the time of writing, Tata Motors' stock price fell by nearly 1% to trade at Rs 391.75 apiece, with market cap of Rs 1,44,255.33 crore. The stock is near its intraday low of Rs 391.15 apiece.

Before the demerger record date, Tata Motors shares stood at Rs 660.90 apiece on BSE after market hours of October 13th, with 52-week high and low of Rs 939.60 apiece and Rs 376.90 apiece respectively.

Nomura Target Prices For Tata Motors & TML Commercial Vehicles:

The global brokerage house has assigned its split target prices on both Tata Motors Passenger Vehicles and TML Commercial Vehicles. The split targets are almost even with Rs 367 target set on PV entity and Rs 365 target recommended for CV entity which is yet to be listed. TML Commercial Vehicles is expected to list in 45 days since record date, hence, somewhere during November.

For PV entity, Nomura believes the new GST rates cut on automobiles is among the driving factors for Tata Motors. In its report, Nomura said, premiumisation trend remains evident, with an upside in bookings for compact and micro SUVs including the Punch and Nexon.

Apart from this, new launches are expected to boost PV sales. Tata Motors management is expecting double-digit EBITDA margins for the medium term compared to current 3.9% levels that was seen in Q1FY26. According to Nomura, this will be aided by richer mix, improved pricing, and cost efficiencies.

The third driving factor is Jaguar Land Rover who recently resumed its production operations after a cyber attack. The brokerage is expecting production to pickup in JLR in the coming weeks. For JLR, the FY26 and FY27F EBIT margin estimates are 6.2%/7.6%.

In case of CV entity, Nomura is predicting 10% growth in H2FY26 supported by GST reduction. Also, TML is set to acquire Iveco in April next year, and the $3.8 billion deal is expected to create value in growth. Due to the acquisition, Nomura expects a 5% revenue growth annually on a compounded basis and EBIT margin seen to 7.5% from 5.4% between 2024-2028.

Overall, Nomura has maintained a Neutral rating.

Tata Motors Demerger Record Date:

Tata Motors demerger record date was fixed on October 14th to determine eligible investors for issuing and allotting 1 (One) share of TMLCV (face value of INR 2/- each fully paid up), for every 1 (One) share of the Company (face value of INR 2/- each fully paid up).

On the Record Date, the share price of TML was adjusted to take into account the demerger of the commercial vehicles business through a price discovery mechanism of the stock exchanges. Upon finalization of the list of eligible Shareholders of TML, the shares in TMLCV shall be allotted and thereafter, such shares shall be listed on the Stock Exchanges, viz., BSE and NSE. The process of obtaining Listing and Trading permission generally takes 45-60 days from the date of filling the necessary application with Stock Exchanges.

How will Tata Motors Demerger Impact Investors?

According to Nirman Broking's blog, here's what investors need to know:

No Loss of Value: You're not losing anything. You'll own shares in both the CV and PV companies.
2. Potential for Re-Rating: After the demerger, both entities could be re-rated separately based on their growth, margins, and capital efficiency.

3. Choice & Flexibility: Investors can choose where they want to stay invested - the stable, cyclical CV play or the high-growth PV + EV + JLR play.

4. Long-Term Value Creation: History shows that well-executed demergers - like those by L&T, ITC, and Adani Group - tend to unlock shareholder wealth over time.

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