Decoding the Tata Motors Demerger: Why the Share Price Fell 40% Today and What It Means for Investors
Tuesday, October 14, 2025 marks a historic and pivotal day for Tata Motors Limited (TATAMOTORS.NS). The stock opened significantly lower, leading to the misleading headline question: Why is Tata Motors share falling today?
The sharp, notional decline of nearly 40% in the Tata Motors share price today is not a crash but a direct consequence of the company’s strategic demerger. The market is merely reflecting the removal of the Commercial Vehicle (CV) business value from the parent entity, which will now primarily focus on Passenger Vehicles (PVs) and luxury operations.
The Tata Motors Demerger Details: Two New Listed Stocks
The demerger of Tata Motors, which became effective on October 1, 2025, splits the giant into two distinct, independently listed companies:
| Old Entity | New Entity Name | Primary Business | Future Stock Ticker (Expected) |
| Tata Motors Ltd. (Original Entity) | Tata Motors Passenger Vehicles Limited (TMPVL) | Passenger Vehicles (PV), Electric Vehicles (EV), and Jaguar Land Rover (JLR) | TATAMOTORS (Adjusted) |
| New Spun-off Entity | TML Commercial Vehicles Limited (TMLCV) (To be renamed Tata Motors Ltd.) | Commercial Vehicles (CV) | TMLCV (Pending Listing) |
The Tata Motors Demerger Ratio
The share demerger ratio for eligible shareholders is 1:1.
For every 1 existing Tata Motors share held on the Record Date (October 14, 2025), shareholders will automatically receive 1 share of the new entity, TML Commercial Vehicles Limited (TMLCV).
Why Tata Motors Share is Falling Today (The Adjustment)
The previous Tata Motors share price (e.g., closing at ₹660.90 on October 13) included the combined value of both the PV/JLR and CV businesses. Since the CV business value has been carved out, the remaining Tata Motors share price today (trading as TMPVL) is mathematically lower.
Example: If the original stock value was ₹660, and the CV business was valued by the market at ₹260, the new TMPVL share price would adjust to around ₹400. This is the demerger share price adjustment, not a loss.
Share Price Targets and Future Outlook
The goal of the Tata Motors split is value unlocking by allowing both the cyclical CV business and the high-growth PV/EV/JLR business to be valued against their respective peers globally.
1. Tata Motors Passenger Vehicles Limited (TMPVL)
This entity is the growth engine, heavily reliant on the JLR segment (contributing around 87% of the consolidated entity’s revenue).
Analyst Target (Post-Demerger): Brokerages like Nomura and SBI Securities have pegged the post-demerger Tata Motors share price target for the PV business in the range of ₹367 – ₹384 per share.
Key Drivers: Recovery of JLR volumes following the recent cyberattack disruption, sustained dominance in the domestic EV market, and strong performance of the SUV portfolio (Tata cars like Punch and Nexon).
2. TML Commercial Vehicles Limited (TMLCV)
This is the newly listed entity, focused on India’s largest CV market.
Analyst Target (Expected Listing Price): Valuations are projected in the range of ₹320 – ₹365 per share.
Key Drivers: The business benefits from infrastructure spending and its planned acquisition of Iveco Group NV’s CV operations, which will significantly expand its global footprint and exposure in alternative fuel technologies.
Critical Investor Action Points
No Panic: The dramatic price fall is purely technical. The total value of an investor’s holding (TMPVL + TMLCV) is expected to remain the same as the pre-demerger value.
TMLCV Listing: The shares of TMLCV will be allotted to eligible demat accounts and listed on the exchanges (BSE and NSE) in the coming weeks, likely in November 2025, after regulatory approvals. Investors do not need to take any action; the shares will be credited automatically.
Renaming: Once listed, TMLCV is expected to be renamed Tata Motors Limited, while the original entity (now the PV business) will be known as Tata Motors Passenger Vehicles Limited.