In a dramatic market move, Tata Motors’ share price dropped nearly 40% on Tuesday, opening at ₹399 compared to Monday’s close of ₹660.90. This fall, however, is not due to negative company performance or investor panic — it’s a technical adjustment following the company’s demerger.
Why Tata Motors Shares Dropped
The sudden fall in Tata Motors’ stock is directly linked to its decision to separate the commercial vehicle business from its passenger vehicle arm. This strategic demerger means that the stock started trading ex-demerger from October 14, 2025.
“The drop in share price is a technical adjustment due to the separation of the commercial vehicle business, not an actual decline in investor wealth,” Tata Motors clarified in an exchange filing.
Under the demerger plan, investors will receive one share of Tata Motors Commercial Vehicles Limited (TMLCV) for each Tata Motors share they held as of the record date — October 14, 2025.
“Eligible shareholders shall be issued and allotted 1 (one) share in TMLCV for every 1 (one) share held in Tata Motors as on the Record Date,” the company said in its statement.
Tata Motors’ New Structure Explained
1. Tata Motors Passenger Vehicles Limited (TMPVL)
Post-demerger, the original Tata Motors entity will be renamed Tata Motors Passenger Vehicles Limited (TMPVL). This company will manage the passenger vehicle (PV), electric vehicle (EV), and Jaguar Land Rover (JLR) businesses — all of which continue to perform strongly both in India and abroad.
2. Tata Motors Commercial Vehicles Limited (TMLCV)
The newly created Tata Motors Commercial Vehicles Limited (TMLCV) will handle the commercial vehicle (CV) division, including trucks, buses, and logistics vehicles. Once regulatory approvals are complete, TMLCV will be renamed Tata Motors Limited — and will be listed on stock exchanges as a separate company.
However, TMLCV shares will not trade immediately until the exchanges approve their listing, a process that generally takes 45–60 days.
No Need to Panic – Here’s Why
Despite the visible drop in share price, investors have not lost any value. The decline is only a reflection of the demerger split between two independent companies. Here’s what investors holding shares as of the record date will get:
- 100 shares of Tata Motors Passenger Vehicles Limited (TMPVL)
- 100 shares of Tata Motors Commercial Vehicles Limited (TMLCV)
“The market value remains nearly the same — it’s simply distributed between two separate listed entities,” market experts explained.
Additionally, media reports suggest that the listing of TMLCV shares is expected within the next 4–6 weeks, likely by mid-November 2025.
Impact on Derivative and F&O Trading
Following the demerger, all old Futures & Options (F&O) contracts linked to Tata Motors expired on Monday. New derivative contracts have begun trading under Tata Motors Passenger Vehicles Limited (TMPVL). Meanwhile, TMLCV will not be part of F&O trading until its listing is complete.
Long-Term Outlook
The demerger is a strategic move designed to unlock shareholder value and allow both divisions — passenger and commercial — to focus on their core strengths. Tata Motors’ PV and EV segments continue to see robust demand, while the CV segment will now enjoy operational independence and targeted growth strategies.
Analysts believe that once the new entity (TMLCV) is listed, investors could witness better transparency, efficiency, and valuation clarity across both businesses.
Final Thoughts
While the 40% drop in Tata Motors’ share price may appear alarming, it’s simply an accounting adjustment. Investors have gained an equal stake in a new company, not lost value. The demerger marks a new phase in Tata Motors’ growth story, creating two specialized, high-potential businesses poised for stronger performance in their respective sectors.
So, if you’re a Tata Motors shareholder — relax. This isn’t a crash, it’s a restructuring win.
Also Read: Should You Buy Cian Agro Stock After 1000% Gain?
About the Author:
Rohit Kumar
I am a skilled content writer and SEO expert with a passion for crafting engaging and informative content. I currently work at Possible11, where I contribute to the company's blog and social media channels. I am also a contributing writer for several online publications. With over 500 articles under my belt, I have a deep understanding of how to create high-quality content that resonates with readers and drives traffic. I am also an expert in SEO, and I know how to optimize content for search engines to improve its visibility. I am a valuable asset to any team, and I am always ready to take on new challenges.
