Did Tata Motors shares really crash 40%? What the demerger plunge actually means

Tata Motors shares fell by a notional 40% in early trade on Tuesday, opening at Rs 399 on the Bombay Stock Exchange, down from Monday’s close of Rs 660.90, as the stock began trading ex-demerger value following the separation of its commercial vehicles business into a new listed entity. The decline reflects the removal of the commercial vehicle business from the parent company’s market value.

October 14 marks the record date for the automaker’s long-awaited split into Tata Motors Passenger Vehicles Ltd (TMPV) and Tata Motors Commercial Vehicles Ltd (TMLCV). Shareholders holding shares on or before October 13 will receive one share of TMLCV for every Tata Motors share held. Regular trading for the stock is set to resume at 10:00 AM on Tuesday.

From today, the parent company will trade without reflecting the commercial vehicles arm, explaining the notional decline in the stock. Tata Motors will be renamed Tata Motors Passenger Vehicles Ltd (TMPV), encompassing passenger vehicles, electric vehicles, and Jaguar Land Rover (JLR) operations. Shares of TMLCV will be credited to demat accounts within 30–45 days, and the new entity will list separately on the NSE and BSE once regulatory approvals are completed.

All existing F&O contracts expiring in October, November, and December were settled on Monday and will be reintroduced with revised lot sizes from today.

Brokerages on post-demerger valuations

Brokerages expect the demerger to clarify valuations and sharpen business focus.

SBI Securities said the split “enables clearer valuation of the company’s distinct businesses.” TMPV, which derives 87% of revenue from JLR, is expected to trade between Rs 285 and Rs 384 post-demerger, with potential upside linked to JLR’s volume recovery and profitability.

For TMLCV, SBI Securities projected a range of Rs 320–470, noting its planned €3.8 billion acquisition of Iveco Group NV’s commercial vehicle operations, expected to triple combined revenues and expand exposure in electric and alternative fuel powertrains. “The integration of Iveco Group NV, most likely in FY27, will expose the company to the global CV cycle,” the brokerage said, while flagging near-term margin dilution due to Iveco’s lower EBIT margin.

YES Securities described the demerger as a “value unlocking opportunity,” noting that pure-play passenger and commercial vehicle businesses will allow investors to target distinct auto cycles.

Bonanza Research Analyst Khushi Mistry said the separation “will lead to sharper business focus for both entities.” TMLCV enters the market as India’s largest commercial vehicle maker, with a 37.1% market share and 12.2% EBITDA margin in Q1FY26, despite a revenue decline. TMPV is expected to grow 8–10% in H2FY26, supported by new launches, strong SUV positioning, and rising EV and CNG demand, which constitute 45% of its passenger vehicle revenue.

Also read | Tata Motors Demerger: Shares to trade ex-CV business from today. What it means for shareholders

JLR recovery to influence sentiment

Jaguar Land Rover (JLR), Tata Motors’ UK-based subsidiary, began a phased manufacturing restart on October 8 after a cyberattack in early September disrupted global operations. Khushi Mistry said the incident caused a 24% drop in wholesale volumes and a 17% decline in retail sales during the September quarter, with estimated losses of £50 million per week. “Full production is expected to resume post-Christmas due to the scale of restoration needed,” she added.

YES Securities noted that “2QFY26 JLR dispatches (-24% YoY and QoQ) were impacted by production losses due to the cyberattack from early Sep’25. However, the retail-level impact was much lower. We expect volumes to gradually improve in 3Q and 4Q, which should support sentiment.”

Implications for shareholders

Shareholders will receive one share of TMLCV for every Tata Motors share held. The cost of acquisition for both entities will be communicated later for portfolio and tax adjustments.

Near-term volatility is expected as the stock adjusts to the new structure. Analysts say the longer-term outlook depends on JLR’s production recovery and TMLCV’s performance post-Iveco integration.

Investors are now watching whether the demerger will reignite momentum in Tata Motors’ shares or whether value creation will take time to materialise.

Also read | TCS, Tata Motors tumble up to 42% from peak, with over Rs 4 lakh crore wiped off Tata stocks in 2025 amid boardroom turmoil

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