Tata Motors Demerger: Markets are inherently forward-looking, and this is clearly reflected in investor sentiment, which is now shifting focus to the upcoming listing of Tata Motors’ commercial vehicle (CV) business following its planned demerger from the passenger vehicle (PV) segment.
Tuesday, October 14, marked the record date for the spin-off of Tata Motors’ PV and CV business. According to the demerger plan, shareholders who owned Tata Motors shares on the record date are entitled to receive one share of the newly-demerged Tata Motors Commercial Vehicle (TMCVL) for every share held as the demerger ratio was fixed at 1:1.
The existing share of Tata Motors will house only the PV business – both JLR and the domestic PV (ICE+EV), along with the investment in Tata Technologies Ltd.
Meanwhile, the demerged entity — TML Commercial Vehicle Ltd will hold the CV business along with other investments, including the stake in Tata Capital.
What could be Tata Motors Commercial Vehicles share price?
During the one-hour pre-market session held on Tuesday, ₹400″>Tata Motors PV shares changed hands at around ₹400. Meanwhile, the gap from Monday’s closing price of ₹660.75 implied a valuation of ₹260.75 a share for the TMCVL share price.
TMLCV shares will list on the exchanges by November, as the company stated that “the process of obtaining Listing and Trading permission generally takes 45-60 days from the date of filing the necessary application with Stock Exchanges.”
Ambit Institutional Equities said that the CV business, with market leadership, industry-matching margins and healthy CFO generation, is better positioned to capitalise on the demerger.
“We expect immediate value unlocking for CV, with residual listed entity price settling at ~ ₹380/share. Global reach and synergies from the Iveco acquisition would provide re-rating upside. We remain buyers,” it opined.
SBI Securities also voiced positive views, saying that the domestic CV industry is likely to start recovering in 2HFY26 on the back of tailwinds such as GST rate reduction on CVs from 28% to 18%, replacement demand and pickup in the infrastructure, construction and logistics sectors. The integration of Iveco Group NV, most likely in FY27, will expose the demerged company to the global CV cycle, it opined.
Against this backdrop, SBI Securities expected Tata Motors’ commercial vehicles share price to trade at ₹320-470 post listing in November, above the implied price of ₹260.75.
Global brokerage Nomura said that post-demerger, its target price is split almost evenly between the two entities at ₹365/share for the CV entity and ₹367/share for the PV entity.
“For the PV business, momentum has picked up after the GST cut as festive and pent-up demand has kicked in. The premiumization trend remains evident, with a surge in bookings for compact and micro SUVs, including the Punch and Nexon,” it opined.
Meanwhile, for the CV business, management expects industry to grow 5% in FY26F (implies 10% growth in H2FY26), helped by GST reduction. The CV business will also include the Iveco acquisition from April 2026, financed through debt initially and later 40% equity. At this stage, we do not assume any significant value creation from this acquisition, the brokerage opined.
Nomura maintained its ‘Neutral’ rating and said it will update its estimates once pro-forma financials are available post-results.
Tata Motors demerger: What does it mean for TMPV shares?
Ambit analysts added that overall, the move supports Tata Group’s broader agenda of streamlining its business structure and driving shareholder value through enhanced transparency and governance.
However, it cautioned about a material price drop due to the separation of the CV business.
SBI Securities also opined that the Tata Motors Passenger Vehicle Ltd (TMPVL), the listed entity, remains exposed to the global passenger vehicle industry.
“JLR contributes 87% to the company’s revenue as of FY25, while the domestic business revenue share is at only 13%. JLR is currently facing its own set of challenges on multiple fronts, from the production disruption due to the cyberattack to the intense competitive intensity in China to the overall consumer slowdown across North America and Europe. Any potential upside in the stock remains dependent on the recovery in JLR volumes and improvement in profitability,” it added.
Shares of Tata Motors traded 1% lower on Wednesday, extending their slide from the last trading session.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
