Tata Motors demerger to maximise value for shareholders: Prabhudas Lilladher

Mumbai-based automaker Tata Motors' decision to pursue a demerger stems from its confidence in the self-sustainability of its Passenger Vehicle (PV) business, driven by notable product improvements and robust volume growth, brokerage firm Prabhudas Lilladher said in a note.

The Commercial Vehicle (CV) business, along with Tata Motor Finance, is set to be part of the demerged entity, with further details awaited. The strategic realignment reflects Tata Motors' commitment to optimising operational efficiencies and maximising value for shareholders, the Mumbai-based brokerage said.

Despite a moderation in wholesale volumes, Tata Motors expects a rebound in demand from the second half of financial year 2025 (FY25), propelled by government initiatives aimed at enhancing physical infrastructure.

The company remains optimistic about delivering a double-digit earnings before interest, taxes, depreciation and amortisation (EBITDA) margin for FY25, despite an expected slowdown in business during the first half of the fiscal year, Prabhudas Lilladher said.

Amid rising competition in the electric vehicles (EV) space, the automaker is doubling down on its commitment to innovation and research and development (R&D).

Meanwhile, the introduction of new products such as the Punch.ev, Tata Curv EV, and Harrier EV reflects Tata Motors' strategic focus on expanding its EV portfolio.

With a target of selling 1 lakh units in FY25 and ambitious plans to increase the EV mix in its product lineup, Tata Motors aims to capitalise on the growing demand for sustainable mobility solutions.

Tata Motors' subsidiary, Jaguar Land Rover (JLR), has shown consistent performance, with a promising outlook fuelled by robust demand in key markets such as the US and stable conditions in Europe.

Additionally, Tata Motors plans to revamp its Jaguar segment by launching its first EV by H2FY25, gradually phasing out ICE engine models to cater to the premium niche market for SUVs.

The company’s decision to pursue a demerger reflects its strategic vision and commitment to unlocking value for stakeholders, brokerage firm Prabhudas Lilladher said.