Tata Motors shares plunge over 4% after Q1 results, board nod for demerger

Shares of Tata Motors plunged over 4% in early trade on Friday, August 2, in the aftermath of the company announcing the results for the June 2024 quarter, and the board giving nod for the demerger proposal.

The stock opened at ₹1,120 apiece on the National Stock Exchange (NSE), down 1.2% as against the last closing price. Minutes into the trade, it dropped further to hit a low of ₹1,090.05, which was 4.75% lower than the previous session's close.

The decline in stock coincided with the overall market sentiment being dampened due to fears of recession in the United States. The release of weaker-than-expected manufacturing data projected a bleak picture of the US economy, which led to markets tumbling worldwide.

NIFTY50, one of the benchmark Indian indices, was down neary 1% at 24,765.4 during the first hour of trading.

Tata Motors Q1 results

In the year-ago quarter, the Mumbai-based automobile major had reported a net profit of ₹3,203 crore.

The consolidated revenue from operations has climbed to ₹1.08 lakh crore in the quarter ended June 2024, which is 6% higher as compared to ₹1.02 lakh crore in the year-ago period.

Nod to demerger proposal

Tata Motors, in a regulatory filing post the market hours on August 1, said its board of directors has given nod for the proposal to demerge the passenger and commercial vehicle businesses, and list them as two separate entities.

The commercial and passenger vehicle businesses will be segregated as TML Commercial Vehicles Limited (TMLCV) and Tata Motors Passenger Vehicles Limited (TMPV), respectively.

The demerger process is expected to be completed within 12-15 months, and will be implemented through an NCLT scheme of arrangement. All Tata Motors shareholders will continue to have identical shareholdings in both listed entities.