Tata Motors Shares Drop 40%; Is There A Reason To Panic?
Investors who had already owned fully owned shares of Tata Motors Ltd by Oct 14 record date will be compensated with one additional share of the Tata Motors Commercial Vehicle business.
Some traders this morning have opened their portfolio with a shock, with several reporting a massive 40% drop in Tata Motors stock. However, investors must note that this is part of an ongoing demerger of the company, and there is no need to panic.
The 40% drop in Tata Motors shares on Tuesday reflects the price of the company's passenger vehicle business, which restarted trade at around Rs 390-400 levels, compared to Monday's closing price of Rs 660.
The Tata Motors consolidated stock, as we used to know it, ceases to exist and will continue in the form of Tata Motors Passenger Vehicle Limited.
Several trade, though, are still unaware of the ongoing demeger of Tata Motors, as the company looks to split its commercial vehicle and passenger vehicle businesses into separately listed entities.
Users even resorted to asking Grok regarding the Tata Motors share price movement.
Is There A Reason To Panic?
Investors have no reason to panic about the sudden drop in the Tata Motors shares. As mentioned earlier, it is the discovered price of the passenger vehicle business, which will be renamed to Tata Motors Passenger Vehicle Limited.
Investors who had already owned fully owned shares of Tata Motors Ltd by Oct 14 record date will be compensated with one additional share of the Tata Motors Commercial Vehicle business, which is expected to list on bourses sometime next month.
Simply put, Iif you own 100 shares of Tata Motors on the record date, here's what you will receive as a retail investor.
100 shares of the passenger vehicle company (your existing holding, renamed).
100 shares of the newly listed commercial vehicle company (renamed as Tata Motors Limited).
However, users must note that this is indeed the new price for the Tata Motors (now Tata Motors PV) stock and positions will be adjusted accordingly, without any bonuses.
