Shareholders, may see a gap-up start on Wednesday morning after Tata Motors announced the conversion of DVRs .
Tata Motors' board approved a scheme of arrangement to reduce the company's capital by canceling the entire 'A' Ordinary Shares .
The conversion of Tata Motors DVRs into ordinary shares is seen as value accretive and beneficial for all shareholders.
Shareholders of Tata Motors DVRs will receive 7 fully paid-up shares of Tata Motors for every 10 DVRs they hold.
The spread between Tata Motors shares & DVRs is around 20% in favor of DVR holders.
DVR/ordinary share spread holders should consider unwinding their positions if the spread narrows to around 8-10 per cent.
Considering the conversion timeline, Nuvama recommends an ideal spread of 15 per cent for setting up fresh positions.
The completion of the conversion process would require approval from regulatory bodies, including Sebi, shareholders, creditors, and NCLT.
ICICI Prudential Mutual Fund holds the largest share (19.4 per cent of equity) in Tata Motors DVR.
Next: Why Debate Over Halal-certified Tea in Indian Rail