Shares of Tata Motors rose over 2% in early trade on Tuesday after the Tata Group company won an arbitral award of ₹766 crore plus interest to compensate for its investment in the now closed Nano factory in Singur, West Bengal.
Snapping previous session losses, Tata Motors shares gained as much as 2.2% in opening trade to ₹642.50, while the market capitalisation rose to ₹2.10 lakh crore. In the previous session, the auto heavyweight ended 1.94% lower at ₹628.25 on the BSE.
Tata Motors shares have witnessed strong rally in the last one year, thanks to improvement in the credit profile on account of improved operating performance due to strong volume growth in Jaguar Land Rover (JLR) and a stronger outlook over the medium term. Adding to it, easing inflation and supply chain issues, and improved semiconductor supplies also boosted its operating performance.
The stock has surged nearly 54% in the past 12 months, while it has jumped over 60% in the calendar year 2023. At the current price, Tata Motors shares trade 5% lower than its 52-week high of ₹677.90 touched on October 16, 2023, while it has risen 71% against its 52-week low of ₹375.50 hit on December 12, 2022.
In a regulatory filing yesterday, Tata Motors said that it has won an arbitral award of ₹765.78 crore along with 11% interest from September 2016 in relation to the automaker’s claim of compensation from West Bengal Industrial Development Corporation Limited (WBIDC) on account of the loss of capital investments at its now defunct manufacturing plant Singur.
“This is to inform that the aforesaid pending Arbitral proceedings before a three member Arbitral Tribunal has now been finally disposed of by a unanimous Award dated October 30, 2023 in favour of TML whereby the claimant (TML) has been held to be entitled to recover from the respondent (WBIDC) a sum of Rs.765.78 crore with interest thereon @ 11% p.a. from September 1, 2016 till actual recovery thereof,” the carmaker said in the regulatory filing.
Tata Motors has also been held to be entitled to recover from the respondent (WBIDC) a sum of ₹1 crore towards cost of the proceedings.
The automaker was allotted 1,000 acres of land in West Bengal to manufacture Nano, its cheapest offering. However, the project was shelved after the company faced stiff opposition from the then Trinamool Congress chief Mamata Banerjee, the current CM of West Bengal. In 2010, Tata Motors set up a plant in Gujarat’s Sanand to exclusively produce the Nano.
The development came ahead of its second quarter earnings report slated to be released on November 2, 2023. Given the recent rise in sales volume and turnaround in its U.K.-based automotive manufacturer JLR numbers in the last few months, the company is expected to report better numbers in the July-September quarter of the current fiscal.
Going ahead, Tata Motors is also expected to benefit from Tata Technologies initial public offering (IPO) expected to be launched this quarter. Tata Technologies, which would be the first public issue from the Tata Group after nearly two decades, has received approval from the Securities and Exchange Board of India (SEBI) to launch an IPO, which is completely an offer for sale (OFS) by its existing promoters and shareholders. Tata Motors owns 74.69% stake in Tata Technologies, while Alpha TC Holdings Pte and Tata Capital Growth Fund I hold 7.26% and 3.63%, respectively, in the company.
Tata Technologies has reserved a portion of its upcoming IPO for employees and shareholders of Tata Motors. It has included a reservation of up to 0.50% of the post-offer paid-up equity share capital for eligible employees and 10% of the offer for Tata Motors shareholders.
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