Tata Motors Demerger: Stock Falls 40% Post Record Date as Commercial Vehicle Arm Splits; What It Means for Investors

Mumbai | October 14

Shares of Tata Motors slipped nearly 40% in early trade on Tuesday, adjusting for the demerger of its commercial vehicle (CV) business. In the special pre-open session, the stock was discovered at ₹400 per share on the NSE — down ₹260.75 or 39.5% from Monday’s close — reflecting the separation of its CV operations into a new listed entity.

The price adjustment, while sharp on paper, is a technical recalibration following the company’s spin-off, not a reflection of market sentiment. Investors holding Tata Motors stock as of the record date — October 14 — will receive shares in the newly formed Tata Motors Commercial Vehicles Limited (TMLCV) in a 1:1 ratio.

Two New Entities, Distinct Focus

The demerger marks a structural reorganisation of Tata Motors into two focused businesses:

– Tata Motors Passenger Vehicles Limited (TMPVL) will now house the passenger vehicle (PV) and electric vehicle (EV) segments, along with Jaguar Land Rover (JLR).
– Tata Motors Commercial Vehicles Limited (TMLCV) will hold the CV division, including medium, heavy, and light commercial vehicles, as well as related investments.

Following regulatory approval, the Ministry of Corporate Affairs (MCA) issued a fresh certificate of incorporation dated October 13, confirming the renaming of Tata Motors Limited to Tata Motors Passenger Vehicles Limited. In due course, TMLCV will be renamed Tata Motors Limited, representing the standalone CV entity.

Tata Motors Share Price: Why the Fall Isn’t a Concern

The nearly 40% decline in Tata Motors’ share price is a mathematical adjustment to reflect the exclusion of the CV division’s valuation from the parent company. Market experts said such adjustments are standard practice in corporate restructurings and don’t indicate erosion in intrinsic value.

According to market observers, shares of Tata Motors Commercial Vehicles Limited (TMLCV) are commanding a grey market premium of around ₹110, indicating investor confidence in the new structure.  Tata Motors shares have corrected around 11% year-to-date, following a multi-year rally of over 400%.

TMLCV Listing and Next Steps

While the demerger has become effective from October 1, TMLCV’s shares are yet to be listed on the BSE and NSE. Tata Motors said the listing process — including submission of applications to exchanges and regulatory approvals — typically takes 45 to 60 days, indicating a potential mid-November 2025 debut for the commercial vehicle entity.

Until then, TMLCV shares will remain non-tradable. Investors will hold entitlements in their demat accounts, which will convert to tradable equity once the listing is complete.

Why Tata Motors Opted for the Demerger

The demerger, approved by the board in August 2024, aims to unlock value by allowing both divisions to pursue independent growth strategies. The company said the separation will help sharpen strategic focus, improve capital allocation, and enable each business to attract investors aligned with its market profile.

The PV and EV arm, under TMPVL, will focus on expanding its electric vehicle portfolio and deepening JLR’s premium positioning in global markets. The CV business, under TMLCV, is expected to benefit from renewed infrastructure spending and freight demand, supported by cleaner technology transitions in the commercial mobility space.

Key Takeaways

Record Date: October 14, 2025
Share Entitlement: 1 TMLCV share for every 1 Tata Motors share
New Names:
– Tata Motors Limited → Tata Motors Passenger Vehicles Limited (TMPVL)
– TMLCV → Tata Motors Limited (post-approval)
Listing Timeline: Expected by mid-November 2025
Reason for Fall: Price adjustment post-demerger

Bottom Line

The Tata Motors demerger signals a strategic shift for India’s largest automaker, carving out independent growth paths for its passenger and commercial vehicle businesses. While the stock’s sharp drop reflects an accounting adjustment, analysts believe the move enhances transparency and could unlock long-term shareholder value once both entities begin trading independently.

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