Tata Motors demerger on Tuesday: Stock down 29% in a year; here’s what investors should know

Tata Motors Passenger Vehicles settled in the pre-open session and is set to list at ₹400 per share on the NSE.

As a part of the demerger plan, the automobile company had set the share entitlement ratio at 1:1, which means a Tata Motors shareholder will receive one fully paid-up share of ₹2 in Tata Motors Commercial Vehicles Limited (TMLCV) of the same class.

The auto giant this month had set October 14 as the record date for ascertaining the shareholders who shall be issued and allotted shares of the demerged entity. This means the very next day after the record date, Tata Motors’ existing shares will turn into the ex-commercial vehicle business and will be renamed Tata Motors Passenger Vehicles Ltd (TMPVL).

As part of its demerger plan, the firm had set the share entitlement ratio at 1:1, which means a Tata Motors shareholder will receive one fully paid-up share of ₹2 in Tata Motors Commercial Vehicles Limited (TMLCV) of the same class.

Additionally, the company fixed October 10 as the record date for determining the debenture holders of the identified non-convertible debentures (NCD) to be transferred from the company to TMLCV.

The company had received a nod from the Mumbai bench of the National Company Law Tribunal (NCLT) in September for its restructuring plan as well.

On March 4, 2024, Tata Motors’ board of directors approved the demerger of the company into two separate listed companies—one for its commercial vehicles business and the other for its passenger vehicles (PV), comprising PV, electric vehicles (EV), Jaguar Land Rover (JLR) and related investments.

Tata Motors' commercial vehicle business will be demerged into Tata Motors Commercial Vehicles Limited (TMLCV). Further, its existing PV business in Tata Motors Passenger Vehicles Limited (TMPV) will be merged into TML, the existing listed entity.

TMLCV and TML will be renamed upon receiving necessary approvals, resulting in two separate entities.

The commercial vehicles business and its related investment will be listed under the name TML. Its passenger vehicle and electric vehicle businesses, JLR, which will merge with the currently listed Tata Motors, will be listed under the name TMPV.

What N Chandrasekaran said…

Addressing shareholders in the company's 80th Integrated Annual Report for FY25, chairman N Chandrasekaran noted that the demerger of Tata Motors into two listed entities—Commercial Vehicles and Passenger Vehicles (including EVs and JLR)—is progressing as planned.

"The proposed demerger will bring greater strategic clarity and agility, enabling a more focused approach to execution and value creation, delivering superior experiences for customers, rewarding careers for employees, and long-term returns for shareholders," N Chandrasekaran said.

In early FY26, shareholders approved the demerger, which is expected to be effective during the second half of 2025, with shareholders receiving equivalent shares in both entities, the chairman added.

Management reshuffle ahead of demerger

Tata Motors on September 29 had said Girish Wagh and Shailesh Chandra will lead commercial vehicle and passenger vehicle entities as part of the demerger process.

The Mumbai-based auto major's commercial vehicles business and its related investments would be housed in one entity, while the passenger vehicles business, including PV (Passenger Vehicle), EV (Electric Vehicle), JLR (Jaguar Land Rover), and its related investments, will be part of the other firm.

In a regulatory filing, the company said its board has approved the appointment of Girish Wagh to the board of TML Commercial Vehicles Ltd—the proposed listed entity in which the commercial vehicles business of the automaker would be demerged—as an Additional Director, Managing Director and CEO, effective October 1, 2025.

The automaker also appointed Shailesh Chandra as an Additional Director, Managing Director and CEO of the passenger vehicle entity company, effective October 1, 2025, for a period of three years till September 30, 2028.

Chandra will continue to serve as the Managing Director of Tata Passenger Electric Mobility Limited, the electric vehicle entity and wholly owned subsidiary of the company, the filing said.

The company also appointed PB Balaji, who is set to join JLR as its global CEO, as a director on the boards of both PV and CV entities.

Tata Motors share price

On Monday, shares of Tata Motors were the biggest laggard on the NIFTY50 index. It had settled at ₹664 per share, falling 2.20%.

Over the past five trading days, Tata Motors’ shares have fallen 6.2%, and since the beginning of the year, the stock has declined more than 11.38%. In the last three months, the shares have slipped 3%, while over a one-year period, they have plunged 29%.

As of the market close on October 13, the company’s market capitalisation stood at ₹2.44 crore.