Shares of Tata Motors on Tuesday rallied 7.9% as investors pinned hopes on better value discovery from the proposed demerger of its passenger vehicle and commercial vehicle businesses. Both Morgan Stanley and JP Morgan gave overweight ratings on the Tata stock which hit a fresh 52-week high of Rs 1,065.60.

The stock is, however, already trading above the target prices of both the global brokerages (Morgan Stanley’s Rs 1,013 and JP Morgan’s Rs 1,000).

While JP Morgan said the demerger might lead to better value discovery, Morgan Stanley said the move reflects confidence in PV business being self-sustaining and could help in better value discovery.

The demerger could take another 12-15 months to complete after which all shareholders of the company shall continue to have identical shareholding in both the listed entities.

“We believe this development signifies management’s confidence that the two businesses (CVs and PVs) will continue to operate independently with greater agility and self-sustaining cash flows (particularly the PV business). Historically, while the CV business has been generating healthy cash flows, the PV business has witnessed challenges in consistent cash flow generation due to its high spending on product development and the re-building phase in its market positioning,” Emkay Global’s Chirag  ..

Explaining the rationale behind the demerger, Tata Motors said while there are limited synergies between Commercial Vehicles (CV) and Passenger Vehicles (PV) businesses, there are considerable synergies to be harnessed across PV, EV and JLR particularly in the areas of EVs, autonomous vehicles, and vehicle software which the demerger will help secure.

The Nexon, Nexon.ev, Harrier and Safari Dark Editions gets an exclusive all-black exterior shade along with #Dark badges all around. The SUVs also feature blacked-out front grille, roof rails, ORVMs, and alloy wheels. Apart from these changes, the SUVs remains identical to its standard versions. The interior of the Nexon and Nexon.ev features a black theme, with black leatherette seats with ‘Dark’ lettering embroidered on the headrests. The Safari and Harrier Dark editions features Blackstone interior theme paired with Piano Black inserts, and leatherette upholstery with ‘Dark’ lettering embroidered on the headrests.

The Nexon is offered with two engine options – a 1.2-litre turbo-petrol and a 1.5-litre turbocharged diesel engine. The petrol engine is available with a 5-speed manual, 6-speed manual, 6-speed AMT and a 6-speed dual-clutch automatic transmission, whereas the diesel gets a 6-speed manual or a 6-speed AMT automatic transmission. The Nexon.ev Dark is powered by a 40.5 kWh battery pack paired with a 143 BHP electric motor and has a claimed range of 465 km on a single charge.

Key highlights on the Nexon.ev includes vehicle-to-vehicle, vehicle-to-load, a suite of in-built apps, a larger touchscreen infotainment system, an all-digital instrument cluster, front and rear light bars, a nine-speaker JBL sound system, blind spot monitor, 360deg camera, connected car tech, sunroof and more.

Auto major Tata Motors’ decision to demerge its businesses into two separate listed entities, namely the commercial vehicles (CV) and passenger vehicles (PV) businesses, is a “non-event” on an immediate basis as the entire process is estimated to get completed over the next 12 to 15 months, said Abhilash Pagaria, head – alternative & quantitative research, Nuvama Institutional Equities.