What happened with Tata Motors? Shares fell 40% in one fell swoop, this is the real reason

Tata Motors Demerger: Due to the demerger of Tata Motors, the company’s shares fell by about 40 percent on the trading day of Tuesday, October 14. However, there is no need for investors to panic due to this decline. Tata Motors has divided its passenger vehicles and commercial vehicles into separate companies.

Tata Motors’ commercial vehicles will now be known as Tata Motors Passenger Vehicles Limited. Shares in the company have been distributed in the ratio of 1:1. The decline seen in the shares will be adjusted according to the price of the shares.

Why was the company demerged?

The decision regarding the demerger of the company was taken by the board of Tata Mortus in August last year. The board believed that having separate businesses would allow more focus on both the companies. Besides, there will be better utilization of existing investments and it will be easier to plan for the future.

Also, the company wants to focus more on new growth opportunities in the future. Both the segments are different from each other. Therefore, demerger of the company was announced by the board. From now on, the passenger vehicle unit of Tata Motors will be known as Tata Motors Passenger Vehicles and the commercial vehicle unit will be known as Tata Motors Passenger Vehicles Limited.

Company share status

The date of demerger was fixed by the company on 14 October. Today, shares of Tata Motors Passenger Vehicles Limited opened at Rs 399 on BSE. The shares of the company were listed in NSE at Rs 400. After listing, a decline of 2 percent was recorded in the company’s shares and it was trading at Rs 391. At market close on Tuesday, the share price of Tata Motors Passenger Vehicles Limited fell by Rs 3.90 or 0.98 percent on BSE and closed at Rs 395.10.

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