NEW DELHI – Screens turned red at the open as Tata Motors fell almost 40 per cent on the NSE, dropping from Monday’s close of ₹660.90 to about ₹399. For a brief spell, it looked like a spectacular skid for the Tata Group’s auto flagship. Social feeds filled with alarm, with one trader on X calling it a “mini heart attack”, while brokers fielded panicked calls from clients watching a third of their value vanish.
Pause the panic. This was not about weak demand or fresh shocks abroad. It was a technical reset tied to a long-planned restructuring. Tata Motors, India’s third-largest carmaker by sales, started trading ex-demerger today. The stock now reflects only the passenger vehicle and JLR business, with the commercial vehicles arm carved out into a separate company.
First proposed in March 2024 and cleared by the National Company Law Tribunal in August and September this year, the split creates two listed firms. As of 1 October, the commercial vehicles unit, covering trucks, buses, and the pending Iveco Group acquisition, moves into Tata Motors Commercial Vehicles Ltd (TMLCV).
Tata Motors Demerger
The remaining business, set to be renamed Tata Motors Passenger Vehicles Ltd (TMPVL), holds the domestic passenger car portfolio, the EV programme, and Jaguar Land Rover (JLR).
Today is the record date, aligned with India’s T+1 settlement cycle. Shareholders on the register at close receive TMLCV shares at a 1:1 ratio, one TMLCV share of face value ₹2 for every Tata Motors share. TMLCV will not list until November, subject to approvals.
Even so, brokers estimate that about 40 per cent of the former equity value sits with TMLCV, which has been stripped from TMPVL’s price. That explains the fall. The remaining stock is now priced in only the passenger business, or roughly 60 per cent of the combined value.
Nomura’s pre-event note set targets at ₹367 for TMPVL and ₹365 for TMLCV, leaving the summed value close to the prior combined price. “The split enables sharper investor choice,” the analysts wrote, with the CV cycle and capital intensity separated from the more tech-led PV growth.
Zerodha told clients before the open to ignore the apparent 40 per cent crash. “It is optics, not economics,” the note said. The NSE’s special pre-open session from 9 am to 10 am backed that up, discovering TMPVL at ₹400, about 39.5 per cent below Monday’s close.
Demerger moves can feel like corporate chemistry. In practice, they are a tidy way to separate different risk and return profiles. Tata Motors arrives here after a turbulent spell. JLR suffered a production halt in March due to a cyberattack estimated at £1.2 billion in impact, and the domestic EV share fell from 67 per cent in Q1 FY25 to 37 per cent now.
Tata Motors Consolidated Revenue
The CV business, run by Girish Wagh, rides infrastructure cycles and the planned €3.8 billion Iveco deal slated for 2026, which can be choppy. The PV arm, under Shailesh Chandra, pursues premium positioning with models like the Harrier and an EV roadmap shaped by the Avinya platform, now delayed to FY27 due to battery supply issues.
Is the slide purely technical in the near term? Yes. There is no earnings shock, no boardroom rift, no fresh tariff blowout at the open. History supports the pattern. When Vedanta separated its aluminum arm in 2020, the stock dropped about 35 per cent ex-entitlement, then stabilized as the market priced the parts on their own merits.
Here, the exchanges apply a standard adjustment. It looks brutal on screen, but it reflects mechanics. Still, it hurts to see red. Many retail investors had already digested an 11 per cent year-to-date drop before today and woke to alarming alerts on apps like Groww and Zerodha, confusing the adjustment with a collapse.
There is more than accounting at work. In FY25, Tata Motors’ consolidated revenue reached ₹439,695 crore, up from ₹345,967 crore a year earlier, aided by JLR’s premium strength. Q2 JLR sales fell 24 per cent year-on-year, yet Range Rover volumes held up.
Earnings per share came in at ₹57.55 in Q1, while ROE touched 23.96 per cent, ahead of five-year averages. Supporters say the split should sharpen focus. TMPVL can chase EV incentives after September’s GST cut on two-wheelers, while TMLCV can target connected fleets as public works gather pace in a ₹10 lakh crore infrastructure pipeline.
Post-Demerger Pricing
Risks still loom. JLR guides EBIT margins below 8.5 per cent for FY26, with US tariff noise and fast-moving Chinese competition not helping. In domestic PV, Mahindra’s Scorpio-N keeps gaining ground, and Maruti’s hybrid push adds pressure.
Ajit Mishra of Religare Broking cautions that near-term swings are likely. With RSI at 44.2, momentum is neutral, and the MACD shows a bearish crossover below the 20-week EMA of ₹688. A drop below ₹625 could test ₹590, he says, while a TMPVL break above ₹715 may open a path to ₹775.
For holders, the play is patience. The company will publish the cost allocation for tax and portfolio resets. TMLCV shares should be credited within 30 to 45 days. Promoters hold 42.57 per cent, a shade lower than 42.58 per cent in June, which signals no meaningful change in stance. Jefferies stays guarded on the PV outlook, yet the street targets cluster around a ₹732 median for the combined value, implying about 15 per cent upside from post-demerger pricing.
Indian markets have seen this before. Reliance’s 2020 Jio spin stirred early nerves, then found a steady footing. Today’s 40 per cent “crash” sits in that same category, a headline figure born of arithmetic. The real work starts now. Two focused companies must prove why the sum of the parts should fetch more than the old whole. As trading settles after 10 am, attention turns from optics to delivery. The Tatas build for the long haul, not for a single session.
