On October 13 2021, A surge in the shares of the Tata group with Tata Motors, Tata Motors DVR, Tata Power, Tata Chemicals, and Tata Investment Corporation surging between 10 per cent and 20 per cent as Tata Motors soared on the plan to amplify electric-vehicle investments, the icing on the cake being the rolling out of an emergency nod for COVID-19 vaccine for kids.
The stock took a toll of 20.43 per cent to reach $506.75 on the BSE. The Company’s market value, too, saw a rise by ₹1,68,256.60 from ₹28,538.6 crores on the BSE: In trading, 89.05 lakh shares at the BSE and over 19.79 crore shares at the NSE. In a bid to expand its EV (electric vehicle) business, including the launch of 10 EV models, a total of about 2 billion USD (over 16,000 crores) will invest in funding the project partly.
The TPG Rise Climate and Tata Motors (TML) have entered a binding agreement whereby TPG Rise Climate and its co-investor ADQ plan to invest in a subsidiary of TML that will be newly incorporated, as said by Tata Motors in a statement.
The TPG Rise Climate, along with its co-investor ADQ, shall invest a total of ₹7,500 crores; it will lock an 11-15 per cent stake in the EV subsidiary at an equal valuation of USD 9.1 billion; the TPG investment is to make in over 18 months of duration. The Company will do the first capital infusion by March 22, and the entire fund is to be injected by the end of 2022, it stated.
Why Tata Motors shares jumped over 20% today?
The transaction allows for EV business value and portrays the future potential of the technology landscape in automobiles; Tata Motors being the PV leader, the fundraise will expand its scope to invest further in areas of products, drive trains, manufacturing, and other upgraded technologies.
The upcoming Company shall leverage all existing investments and abilities of Tata Motors and manoeuvre the future assets into Electric vehicles (EV), dedicated BEV platforms, boost investments in charging the infrastructure and battery technologies, the Company added.
The brokerage firm said: “Recovery is underway in all the of the three businesses of TML. While the India CV business would see a cyclical recovery, the India PV business would witness a structural recovery, supported by a favorable product mix. However, supply-side issues would defer the recovery process”. Motilal Oswal Financial Services stated: “While this business is still at a nascent stage, this transaction sets benchmark valuations and makes us value this business separately.
The Company plans to create a portfolio of 10 EVs over the next five years and incorporation with the Tata Power, boost the creation of charging infrastructure to facilitate the rapid growth of EV in India, Tata Motors added.
Chairman N Chandrasekaran of Tata Motors said, “I am delighted to have TPG Rise Climate join us in our journey to create a market-shaping electric passenger mobility business in India. We will continue to proactively invest in exciting products that delight customers while meticulously creating a synergistic ecosystem. We are excited and committed to play a leading role in the government’s vision to have a 30% per cent electric vehicles penetration rate by 2030.
Tata Motors wishes to delight their ever-welcoming customers with an excellent treat that also happens to be a step in advancing the Indian ecosystem and giving it a boost through technical power. In a year or two, we soon will be merrily welcoming the gift that will nurture our requirements and cut out on the degradation of the environment, hopefully!