Tata Motors gathers steam on Sensex, shooting up sharply ahead of the scheduled demerger — what does it mean for investors?
In an impressive two-day rally, Tata Motors shares rose 8%, fueling fresh investor interest as the company prepares for a dramatic structural change through its approved demerger.
Strong Stock Rally Mirrors Fresh Investor Confidence
Tata Motors was the biggest gainer on the Sensex on Thursday, May 7, extending its rally from the day before. The stock opened with a gap-up of 2.9% at ₹700 and touched an intraday high of ₹704.50. By 11 AM, it was up 2.60% at ₹698, with over 1.39 crore shares having been traded, indicating high market participation.
The stock is trading higher than its 5-day, 20-day, and 50-day moving averages but still behind the 10-day and 200-day averages. This trend indicates short-term bullishness, but long-term trends might still be settling.
On Wednesday, Tata Motors had already recorded a 5% increase, ending at ₹680.30 on the NSE. The gains follow after shareholders voted to approve a demerger, which seems to have lifted market mood.
Expert Analysis: Bottom Formed, Upside Potential to ₹800
Market analyst Swadesh of ET NOW pointed out that Tata Motors has recovered sharply from the ₹600-₹610 levels, indicating a bottoming-out trend. In his view, “the ferocious selling in the last six months appears to be over, and further downside seems limited.”
He suggested a HOLD rating, emphasizing the high support level of ₹580 to ₹600. On the current strength, the stock may reach ₹775 to ₹800 in six months. Yet, he suggests that investors should hold a stop loss at ₹545 to effectively control risks.
“Short-term reversal signs are strong,” was the comment from the analyst, noting Tata Motors is poised for a breakout if the rally sustains.
Dividend Outlook: Declaration Expected in Upcoming Q4 Results
In a welcome news for shareholders, Tata Motors is likely to announce a dividend as part of its forthcoming Q4 FY25 results, to be announced on May 13. The board will also deliberate recommending a final dividend at the 80th Annual General Meeting.
The firm, in its exchange filing, said that the board would convene to consider financials and recommend dividend suggestions, if any, for the year ended March 31, 2025. The step is consistent with Tata’s shareholder-centric strategy, which can further enhance investor sentiment.
Demerger Details: A Major Restructuring on the Horizon
Earlier this week, Tata Motors has confirmed that 99.9995% shareholders have endorsed the proposed demerger, and it marks the historic re-structuring of the company. It proposes dividing Tata Motors into two standalone listed entities — one with passenger vehicles and the other for commercial vehicles.
This strategic move is designed to unlock value and facilitate sharper business focus for every segment. The demerger will be completed by Q3 of FY 2026, and analysts expect it to act as a catalyst for long-term growth and investor re-rating.
The action is viewed as a manifestation of Tata’s continued transformation and modernization drive, particularly with the electric vehicle segment picking up pace under its passenger vehicle business.
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