Tata Motors Approaches Crucial Demerger Milestone

Tata Motors (ISIN: INE155A01022) shareholders are facing a pivotal moment as the company approaches its planned demerger of the Commercial Vehicles business. Monday, October 13, marks the final day for trading Tata Motors shares as a consolidated entity before the split takes effect.

Key Demerger Details

Shareholders who hold Tata Motors shares at the close of trading on Monday will be eligible to receive one share of the demerged entity for each share they own. The demerger scheme, which became effective on October 1, 2025, will result in two separate entities:

1. Tata Motors Passenger Vehicles Ltd. (existing entity)
2. Tata Motors Ltd. Commercial Vehicles (new entity)

Post-Demerger Trading and Challenges

It's important to note that shares of the newly demerged Commercial Vehicles business will not be immediately tradeable. Shareholders should expect a 45-60 day period for the listing process to complete before these shares become available for trading.

While the demerger progresses, Tata Motors faces additional challenges, particularly with its Jaguar Land Rover unit. A recent cyberattack could potentially result in costs exceeding £2 billion, adding pressure to the company's operations.

Recent Stock Performance

Tata Motors' stock has shown some volatility in recent trading sessions:

Investors and market watchers will be keenly observing how the demerger impacts the valuation and performance of both resulting entities in the coming weeks.

Tata Motors shares gained momentum on Monday, breaking a five-day losing streak as investors gear up for the company's upcoming demerger. The stock climbed nearly 1% to Rs 686.20, reflecting renewed interest ahead of the October 14 record date for the separation of its passenger and commercial vehicle businesses.

Demerger Details

The Composite Scheme of Arrangement, which became effective from October 1, creates two independent entities:

1. Tata Motors Passenger Vehicles (TMPV): Encompassing PV, EV, and JLR businesses
2. TML Commercial Vehicles (TMLCV): Focusing on domestic CV operations

Shareholders will receive shares in both companies at a 1:1 ratio, with the record date set for October 14.

Key Points of the Demerger

Market Implications

The demerger is expected to have significant implications for Tata Motors' stock:

• Price Adjustment: On the record date, TML's share price will be adjusted to reflect the demerger of the commercial vehicles business through a price discovery mechanism on the stock exchanges.
• Temporary Trading Suspension: TMLCV shares will not be available for trading on stock exchanges from the date of allotment until they are listed, a process that typically takes 45-60 days.
• Unlocking Value: YES Securities anticipates that the split will unlock value by creating pure-play verticals, potentially benefiting shareholders in the long run.
• Increased Volatility: Analysts warn of potential increased volatility around the ex-date as the market adjusts to the new corporate structure.

Recent Challenges

The demerger comes at a time when Jaguar Land Rover, a key component of Tata Motors' passenger vehicle business, is gradually restarting production following a cyberattack in September. This incident resulted in:

• A 24% drop in wholesale volumes
• Estimated losses of £50 million per week

Technical Outlook

Despite the recent uptick, Tata Motors' stock remains below most key moving averages, with resistance noted at Rs 720. This technical positioning suggests that while the demerger news has provided some positive momentum, the stock may still face challenges in the near term.

Investors and market participants will be closely watching how the demerger unfolds and its impact on the valuation of both entities in the coming weeks. The success of this corporate action could set a precedent for other conglomerates considering similar restructuring moves in the Indian market.