IGI Logo

Below the Views on Tata Motors Demerger from Mr. Ashwin Patil, Senior Research Analyst at LKP securities

"Tata Motors demerger-
The announcement of demerger between the two businesses of Tata Motors into CVs and PVs shall split the business value into half and should enable focussed approach and flexibility.Also the synergies are lacking in both the businesses, which explains the move.Their volume performances, margins, drivers, competitors are totally diverse. Therefore it is a smart move from the company, which was always on the anvil since a while now.
From competition point of view, the PV business can now directly compete with the market leader Maruti, with the global ammunition in the form of JLR and bridge the gap on valuation front. With Hyundai's listing on the cards and M&M as the fourth rival, the tussle in the PV space will be interesting to watch and can give an investor a fair choice to select between four of them.
On the CV front, TaMo will compete straightaway with the pure play domestic player Ashok Leyland.
We believe a better cash utilization should add to the positive sentiments. Since its an equal split, we can't take a call on valuations.
We stay positive on the stock."

Above views are of the author and not of the website kindly read disclaimer