Tata Motors shares have been facing selling pressure throughout October 2025. From the announcement of the Tata Motors demerger effective date to the record date, the auto giant’s stock consistently traded lower. Following the demerger record date, Tata Motors’ share price dropped from ₹660.75 on the NSE to ₹396.50, marking a 40% decline post-demerger. This steep fall has raised concerns among investors about whether the demerger was a loss-making move or a strategic long-term benefit.
Understanding the Tata Motors Demerger
According to market experts, Tata Motors’ demerger is a composite scheme aimed at creating two independent and focused entities:
- Tata Motors Commercial Vehicles (TMLCV)
- Tata Motors Passenger Vehicles (TMPV)
Under this scheme, shareholders will receive one share of Tata Motors Commercial Vehicles (TMLCV) for every share held in Tata Motors Ltd.
The newly formed TMLCV is expected to list on Indian stock exchanges in November 2025. After the demerger:
- TMLCV will represent 37.10% of Tata Motors’ business.
- TMPV will hold the remaining 62.90%.
Despite the initial stock price correction, experts believe investors will benefit in the long term, as TMLCV shares could list between ₹300 and ₹470, potentially offering a decent premium.
Expert Opinions: Why the Share Dip Isn’t a Concern
Khushi Mistry, Research Analyst at Bonanza, stated that the 1:1 demerger would enable Tata Motors to create two specialized companies, each focusing on its core strength.
“TMLCV will enter the market as India’s largest commercial vehicle (CV) manufacturer with a 37.1% market share,” she said.
She also highlighted the fundamental strength of both entities:
- In Q1 FY26, the CV segment maintained a robust EBITDA margin of 12.2%, even amid declining revenue, driven by operational efficiencies.
- The segment will gain further advantage from Tata Motors’ €3.8 billion acquisition of Iveco, positioning it as the world’s fourth-largest truck manufacturer (above 6 tonnes).
- The domestic CV market is projected to grow 3–5% in FY26, fueled by infrastructure and e-commerce expansion.
Meanwhile, the TMPV division will include the passenger vehicle, electric vehicle (EV), and Jaguar Land Rover (JLR) businesses.
The PV segment is expected to grow 8–10% in H2 FY26, supported by:
- New product launches
- Strong SUV portfolio
- Rising demand for EVs and CNG vehicles, which together contribute 45% of PV segment revenue
Reward or Trap for Investors?
Seema Srivastava, Senior Research Analyst at SMC Global Securities, explained that the demerger allows clearer valuation of each business.
“Post-demerger, Tata Motors’ Commercial Vehicles division will trade independently, letting investors assess it on its own financial strength and market prospects rather than being bundled with the PV and JLR segments.”
She estimated a notional value of around ₹260–₹270 per share for the CV arm, based on the residual value of Tata Motors’ pre-demerger stock. However, Srivastava expects the actual listing price to be higher, in the ₹300–₹470 range, as market sentiment improves with infrastructure revival and growth in logistics and construction sectors.
Conclusion
While Tata Motors’ share price has dropped sharply since the demerger record date, experts suggest that this is a temporary market adjustment. The creation of two focused entities—TMLCV and TMPV—positions Tata Motors for stronger, more transparent growth across both the commercial and passenger vehicle segments. Investors are advised to view the demerger as a value-unlocking opportunity rather than a loss, as both entities are expected to perform well independently in the long term.