Tata Motors shares slumped nearly 40 per cent on Tuesday as the stock began trading without the value of its commercial vehicles business, marking the final leg of the automaker’s much-anticipated split into two listed entities.
In a special one-hour pre-open session held between 9 aam and 10 am on the BSE and NSE, Tata Motors’ shares were discovered at ₹400 apiece, down 39.5% ( ₹260.75) from Monday’s closing price of ₹660.75. The sharp fall reflects the price adjustment post the demerger of the company’s trucks and buses business into a new entity.
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This special trading session, introduced by Indian exchanges in 2023 for companies undergoing demergers, was aimed at minimizing volatility during price discovery.
Final step in Tata Motors’ historic split
Tuesday’s trading marks the completion of Tata Motors’ demerger, announced in March 2024, aimed at unlocking the value of its passenger vehicles (PV), electric vehicles (EV), and Jaguar Land Rover (JLR) businesses separately from its commercial vehicle (CV) operations.
Under the plan:
- Tata Motors’ passenger vehicle, EV and JLR businesses will remain in the existing listed entity, which has been renamed Tata Motors Passenger Vehicles Ltd. (TMPVL).
- The commercial vehicle arm has been spun off into a new company - Tata Motors Commercial Vehicles Ltd. (TMLCV) - which will eventually take on the name Tata Motors Ltd.
- Shareholders will receive one TMLCV share for each Tata Motors share held, as per the 1:1 entitlement ratio.
Under the plan:
- Tata Motors’ passenger vehicle, EV and JLR businesses will remain in the existing listed entity, which has been renamed Tata Motors Passenger Vehicles Ltd. (TMPVL).
- The commercial vehicle arm has been spun off into a new company - Tata Motors Commercial Vehicles Ltd. (TMLCV) - which will eventually take on the name Tata Motors Ltd.
- Shareholders will receive one TMLCV share for each Tata Motors share held, as per the 1:1 entitlement ratio.
The company fixed October 14 as the record date to determine eligible shareholders. Shares of TMLCV are not yet listed and are expected to debut on the exchanges within 45–60 days, likely by mid-November.
Brokerages peg CV unit value at ₹274 a share
Brokerage Nuvama Wealth Management, in a note to clients on Monday, had valued Tata Motors’ commercial vehicle business at ₹274 per share, or about ₹1 trillion. The difference between Monday’s closing price and Tuesday’s discovered price is expected to roughly reflect this value.
The CV unit is India’s largest manufacturer of trucks and buses, and Tata Motors has been bolstering its global footprint - including a €3.8 billion ($4.4 billion) all-cash acquisition of Italy’s Iveco Group NV in July.
JLR challenges cast a shadow
The demerger comes at a sensitive time for Tata Motors. Its luxury unit, JLR, has faced a series of setbacks this year - from US tariffs on UK-made vehicles to a crippling cyberattack that temporarily shut factories worldwide and required an emergency government bailout. Production has only partially resumed in recent weeks.
Tata Motors stock had already been under pressure ahead of the split. It closed 2.7% lower on Monday, marking seven consecutive sessions of decline, and is down nearly 29% over the past year, compared with a 1% rise in the Nifty 50 index.
Name changes and listing timeline
Following regulatory approval from the Ministry of Corporate Affairs on October 13, the company officially changed its name from Tata Motors Ltd. to Tata Motors Passenger Vehicles Ltd.
The CV unit will assume the Tata Motors Ltd. name once its listing process is complete. Typically, listing and trading approvals for spun-off entities take four to six weeks after the record date.
Tata Group Chairman N Chandrasekaran has positioned the demerger as a strategic move to simplify the group structure, sharpen business focus, and align capital allocation with growth priorities - especially in EVs and global luxury markets.