Tata Motors Share V/S DVR

What is a DVR?
DVRs or differential voting rights are shares that carry different voting rights than ordinary shares. In this case, voting right for one DVR was equal to 10% of the voting right of an ordinary share and a 5% higher dividend. Therefore, 10 Tata Motors DVRs carry 1 vote.

Tata Motors was the first company to issue a DVR in India. It received a very underwhelming response where the underwriter JM Financial had to renegotiate terms with the company and the Tata Group had to pick up most of the stake which was up for sale.

DVRs also take a haircut in terms of price due to their lower voting rights, lower liquidity and the reluctance of shareholders which may need greater incentives to invest. This Haircut is the difference between the equity share price and the price of the DVR. In developed countries this haircut is lower. Higher liquidity and trading volumes also reduce this haircut.

Tata Motors DVR Dividends:
The DVR Holders receive a higher dividend on Face Value making the Dividend yield higher for DVR Holders.

Date Tata Motors DVR Tata Motors Equity
03-Aug-09 6.5 6
10-Aug-10 15.5 15
19-Jul-11 20.5 20
18-Jul-12 4.1 4
30-Jul-13 2.1 2
09-Jul-14 2.1 2
18-Jul-16 0.3 0.2


Equity Share Price V/S DVR Price

A few things become evident by looking at the above chart:

  1. The % difference between the DVR and Equity share tends to move inversely with the equity share price. I.e. As the equity share price of Tata Motors falls, the % difference between the price of the DVR and equity share increases.This means that the price of the DVR has fallen at a greater rate in comparison to the equity share.
  2. The % difference between the price of the DVR and Equity Share is at a record high at 59.5%
  3. The average % difference between the DVR and share price since 2015 is 41.4%. . The range for the % difference is shown below:
Date Tata Motors DVR Price Tata Motors Equity Share Price % Difference
Lowest 28-Jan-16 267.5 334.2 20.0
Highest 11-Dec-19 64.15 158.45 59.5


  1. As the % difference increases, the return provided by the DVR in comparison to the equity share decreases.Since the % difference between the equity share price and the DVR is at a record high, now is a good time to consider investing in the DVR in place of the Equity share if one is looking to invest in Tata motors as Historical data suggests that the Equity Share Price and DVR % difference should converge to its average or at least decrease once the company starts doing better which will mean a higher % return for DVR holders in comparison to equity share holders and a much higher dividend yield.


If the company’s performance improves in the future, the DVR will provide greater capital appreciation to its holders.


Daily Bulletin (11th December, 2019)


1.Scrip code : 540725
Name : Share India Securities Limited
Subject : Board Meeting Intimation for Allotment Of Equity Shares
Share India Securities Ltdhas informed BSE that the meeting of the Board of Directors of the Company is scheduled on 16/12/2019 ,inter alia, to consider and approve the Allotment of Equity Shares of M/s. Share India Securities Limited to the Shareholders of erstwhile M/s. Total Securities Limited, pursuant to the Scheme of Amalgamation.

2.Scrip code : 532705
Name : Jagran Prakashan Limited
Subject : Announcement under Regulation 30 (LODR)-Public Announcement-Buyback of Shares
Submission of Public Announcement dated December 10, 2019 (“Public Announcement”) for the Buyback of Equity Shares of INR 2/- each (“Equity Shares”) for a maximum amount of INR 1,01,25,00,000 from the open market through stock exchange mechanism pursuant to the provisions of the SEBI (Buy-Back of Securities) Regulations, 2018 and the Companies Act, 2013, as amended.

3.Scrip code : 500350
Name : RSWM Limited
Subject : Intimation Of The Outcome Of The Meeting Of The Board Of Directors (‘Board’) Of RSWM Limited (‘Company’)
We wish to inform you that the Board, in its meeting today, i.e., 11th December, 2019 has considered and approved, among others, the issuance of fully paid up equity shares of the Company for up to an aggregate amount not exceeding Rs. 1500 Million by way of rights issue (the ‘Issue’) to eligible equity shareholders of the Company as on the record date and on such other terms (to be decided by the Board or a duly constituted Committee of the Board at a later date) in accordance with applicable law, including Companies Act, 2013 and the rules made thereunder and the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, each as amended. The meeting started at 12:30 P.M and concluded at 03:30 P.M. We request you to take the above on record and that the same be treated as compliance under the applicable regulation(s) under the SEBI Listing Regulations.