Tata Motors demerger: Special pre-open session, stock split, record date and share price adjustment explained

Tata Motors is set for demerger on October 14 as two separate entities: Tata Motors Passenger Vehicles Ltd and Tata Motors Ltd.

The existing listed company will be renamed Tata Motors Passenger Vehicles Ltd and it will include passenger cars and JLR business of the company. On the other hand, the new entity will assume the name Tata Motors Ltd and will have commercial vehicles.

The move is expected to unlock value for investors. However, it has slumped around 11 per cent this year amid challenges faced by its luxury car maker Jaguar Land Rover. It has plunged 5 per cent in the last one month.

Pre-opening session

For investors who are awaiting Tata Motors demerger, the National Stock Exchange (NSE) has scheduled a special pre-opening trading session on Tuesday. The session is scheduled from 9 am to 10 am ahead of stock split and restructuring.

Record date and ex-date

The record date, October 14, will determine which shareholders are eligible to receive shares of the demerged entity. Those who are holding Tata Motors shares by end of Tuesday market closure will be eligible to receive one share of the new demerged company for every share they have.

It should be noted that the ex-date was October 13. Any purchases made on or after the ex-date will not be eligible for the demerger allocation. Since the settlement is T+1 cycle, investors have to buy shares by October 13 to be on record by October 14.

Share allocation

The shares of the new entity will be allocated likely by October or early November.

Listing date

The listing date of the PV entity is expected to be announced after regulatory formalities are completed.

How will demerger affect Tata Motors share price?

The stock price of Tata Motors will be adjusted to reflect the value of the two entities with the combined value of both stocks remaining close to the pre-demerger price.

Investors should expect price fluctuations in the short term as the market value of both entities will be discovered independently.

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