Tata Motors demerger: Should you add or just hold on? Gurmeet Chadha answers

economictimes.indiatimes.com:

Gurmeet Chadha, Managing Partner & CIO, Complete Circle Consultants, says maybe the current upside in Tata Motors could be tapped. But in his view, the way electrification is progressing, if they can demonstrate more, the PV business and eventual listing of EV business will create more value. So long term, it is still constructive. In the short run, the bulk of the positive news probably is getting reflected in this.

On Tata Motors demerger. What changes for the investor? Is this a trigger to add positions or just continue holding on?
Gurmeet Chadha: A lot of re-rating in Tata Motors has already happened. The stock was around 100 levels during Covid and it has been a 10x turn, a phenomenal wealth creation. That has more got to do with the turnaround businesses. They have reduced debt. For example, the JLR margins went up by 400 basis points last quarter. The overall margin got a boost. In the CV portfolio, the EBITDA margin was up almost 210 to 240 basis points.

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The current sales mix is about 65 JLR, 20 CV and the balance is personal PV vehicles. Now the EBITDA margin for PV is slightly lower because of the investments which are going into EV. So this demerger has two purposes in my view. One is obviously they believe that now the personal vehicle business is sustainable