Tata Motors , a leading Indian automotive manufacturer, has made two significant announcements that are set to impact its business operations and shareholders.

Commercial Vehicles Business Demerger

Tata Motors has set the record date for its Commercial Vehicles (CV) business demerger for mid-October, with the listing of the demerged entity expected in November. The demerger will take effect from October 1, following approval from the National Company Law Tribunal (NCLT).

Key points of the demerger:

• Shareholders will receive one share of the demerged entity for every Tata Motors share held.
• Current Tata Motors shares will trade ex-CV business after the record date.
• The existing Tata Motors will be renamed Tata Motors Passenger Vehicles Ltd.
• The demerged CV business will be listed as Tata Motors Ltd.

This strategic move is aimed at creating two distinct entities, allowing each to focus on its core business and potentially unlock value for shareholders.

Jaguar Land Rover Update

In a separate development, Jaguar Land Rover (JLR), a material subsidiary of Tata Motors, has provided an update on the recent cyber incident that affected its operations.

According to a statement released:

• JLR is implementing a controlled, phased restart of its operations.
• Some sections of manufacturing operations will resume in the coming days.
• The company continues to work with cybersecurity specialists, the UK Government's National Cyber Security Centre (NCSC), and law enforcement to ensure a safe and secure restart.

A JLR spokesperson stated, "We continue to work around the clock alongside cybersecurity specialists, the UK Government's NCSC and law enforcement to ensure our restart is done in a safe and secure manner."

Market Reaction and Analyst View

Despite these developments, Tata Motors' shares closed little changed at ₹674.00. Jefferies, a prominent financial services company, maintained an Underperform rating on Tata Motors with a price target of ₹575.00. The rating cites challenges for Jaguar Land Rover and concerns about passenger vehicle margins.

Tata Motors has indicated that JLR will resume production in phases but faces challenging near-term demand across Europe, China, and the US.

As these events unfold, investors and industry observers will be closely watching how Tata Motors navigates the demerger process and how quickly JLR can recover from the cyber incident to resume full operations.

Tata Motors is experiencing a mix of positive and negative developments, as its subsidiary Jaguar Land Rover (JLR) receives significant support from the British government while facing a credit rating outlook change.

UK Government Support for JLR

The British government has announced a £1.5 billion loan guarantee to Jaguar Land Rover, aimed at supporting the luxury carmaker's supply chain. This move comes in response to a severe cyberattack that has forced JLR to halt production for nearly a month. The loan, which will be privately financed and guaranteed by UK Export Finance, is expected to provide crucial support to JLR's suppliers, some of whom reportedly have only one week of cash reserves remaining.

Impact of Production Shutdown

JLR's production is scheduled to remain paused until October 1, with the shutdown estimated to cost the company £50.00 million per week. If the situation persists, the total financial impact could potentially reach £2.00 billion. Under normal circumstances, JLR's three UK factories produce approximately 1,000 cars daily, underscoring the significant scale of the disruption.

JLR Resumes Operations

In a positive development, Jaguar Land Rover has restarted its operations after experiencing a cybersecurity issue. The company is resuming its manufacturing phase with assistance from cybersecurity experts and the UK government to address the security concerns. This resumption marks a crucial step in JLR's recovery from the recent disruption.

Moody's Credit Rating Update

Despite these positive steps, Moody's has confirmed Tata Motors' BA1 credit rating while changing the outlook from positive to negative. The rating agency also confirmed JLR's BA1 ratings but altered the outlook to negative due to the major cyber incident that has disrupted operations. Moody's predicts it will take weeks to restart operations fully. While Moody's believes Tata Motors could provide financial assistance to JLR if necessary, the agency considers this scenario unlikely.

Tata Motors' Domestic Performance

On a brighter note, Tata Motors has reported strong performance in the Indian market during the festive season. The company recorded over 10,000 deliveries and received 25,000 inquiries on the first day of Navratri alone. This surge in domestic interest follows recent price adjustments implemented after GST rate revisions.

Market Implications

The mixed news has had a varied impact on Tata Motors' shares. While the positive developments regarding government support for JLR and the resumption of operations initially helped the stock recover some ground, the negative outlook from Moody's may temper investor enthusiasm. As the situation continues to evolve, market participants will likely keep a close eye on JLR's recovery efforts and Tata Motors' overall performance in both domestic and international markets.