Tata Motors gains 3% on nod for DVR share conversion; soars 88% in 2023
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Shares of Tata Motors rose 3 per cent on the BSE to Rs 729.30 in Friday’s intra-day trade after stock exchanges granted the company 'no objection' to the cancellation of Tata Motors DVR shares.
"BSE and NSE granted their 'no objections' to the scheme of arrangement among Tata Motors and its shareholders and creditors for the cancellation of the entire ‘A’ ordinary share capital (DVR) and issuance and allotment of ordinary shares as consideration for such reduction of capital, " the firm said in a filing.
The validity of this 'observation letter' will be 6 months from December 21, within which the scheme will be submitted to the NCLT.
Tata Motors on July 25, 2023 announced that it will convert its DVR shares to ordinary shares. Under this, it will issue 7 fully paid-up new ordinary shares with a face value of Rs 2 for every 10 DVR shares with a face value of Rs 2.
Tata Motors DVR was also trading nearly 3 per cent up, as of 10:50 am Friday.
Besides, a healthy outlook has also helped the stock of Tata Motors zoom 88 per cent so far in 2023, as compared to a 16.2 per cent rise in the S&P BSE Sensex. The stock had hit a record high of Rs 734.85 on December 18.
Tata Motors is looking at a strong H2FY24E (October-March) and beyond due to improvements in all 3 business verticals.
Jaguar Land Rover (JLR) is expected to see higher volumes and an improved product mix leading to higher earnings before interest tax (EBIT) margin guidance for FY24E.
"Tata Motors-Commercial Vehicle (CV) will continue to see double-digit EBITDA margins backed by strong realizations. Passenger Vehicle (PV) margins are likely to improve due to new product launches recently and improvements in electric vehicle (EV) margins. With all 3 businesses firing in the right direction, Tata Motors is well poised to deliver a solid performance ahead", said brokerage KRChoksey in September.
S&P Global Ratings in November said that Tata Motors' debt reduction will likely accelerate over the next 12-18 months, driven primarily by strong free operating cash flow (FOCF) at JLR.
“We expect JLR to report positive FOCF of over £2 billion in both fiscals 2024 (year ending March 2024) and 2025, compared with about £500 million in fiscal 2023. This will likely drive sharp deleveraging at Tata Motors,” the global rating agency said.
Tata Motors expects next year - both calendar and fiscal - to be the best on record in terms of sales volume for the company's passenger vehicles business, driven by the new models it plans to launch with electrical and conventional powertrains, the management told the Economic Times.
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Under his leadership, the Tata Group evolved from a largely India-focused entity into a global powerhouse, marked by significant advances in financial strength and technological prowess.
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