Shares of Tata Motors with differential voting rights (DVR) are in demand and soared over 5% to Rs 313, its record high on the Bombay Stock Exchange (BSE).
The stock opened at Rs 294 and has seen huge trading activity on the counter. At 1425 hours, a combined 4.11 million shares changed hands on the BSE and NSE.
Tata Motors’ ordinary shares however, trading higher by 1% at Rs 449 on the BSE. The stock opened at Rs 446 and touched a high of Rs 451 so far.
Meanwhile, the gap between the DVR shares and ordinary shares narrowed to 31% today, also its lowest level since January 2008. The discount was 47% in last month and high of 56% in October 2000.
Tata Motors DVR has 10% of the ordinary voting rights and higher dividend per share by 5% than the aggregate dividend rate for main shares.
According to analyst at Angel Broking, globally, the DVR shares have been trading either at parity or very small discount to their main shares.
Furthermore, stocks like Volkswagen have their DVR form trading at premium to main shares. Successively, we assume Tata Motors DVR shares which are trading at 46.7% discount to main shares, to rise until the discount gap reduces to 25.0% in coming two years, analyst said in a report dated April 7, 2014.
Considering the target price for Tata Motors at Rs 487 and expectation of the discount to reduce to 25.0% over recommend Buy rating on Tata Motors DVR with a target price of Rs 365, added analyst.
The stock opened at Rs 294 and has seen huge trading activity on the counter. At 1425 hours, a combined 4.11 million shares changed hands on the BSE and NSE.
Tata Motors’ ordinary shares however, trading higher by 1% at Rs 449 on the BSE. The stock opened at Rs 446 and touched a high of Rs 451 so far.
Meanwhile, the gap between the DVR shares and ordinary shares narrowed to 31% today, also its lowest level since January 2008. The discount was 47% in last month and high of 56% in October 2000.
Tata Motors DVR has 10% of the ordinary voting rights and higher dividend per share by 5% than the aggregate dividend rate for main shares.
According to analyst at Angel Broking, globally, the DVR shares have been trading either at parity or very small discount to their main shares.
Furthermore, stocks like Volkswagen have their DVR form trading at premium to main shares. Successively, we assume Tata Motors DVR shares which are trading at 46.7% discount to main shares, to rise until the discount gap reduces to 25.0% in coming two years, analyst said in a report dated April 7, 2014.
Considering the target price for Tata Motors at Rs 487 and expectation of the discount to reduce to 25.0% over recommend Buy rating on Tata Motors DVR with a target price of Rs 365, added analyst.
