Tata Motors shares appeared to crash nearly 40% on Tuesday, alarming investors as prices fell from ₹660.90 on Monday to ₹399 in early trade. However, experts clarify that this sharp decline is not due to poor performance or a market meltdown but a technical adjustment following the company’s long-anticipated demerger.
The automaker has officially separated its commercial vehicle division from its passenger vehicle business, creating two distinct entities — Tata Motors Passenger Vehicles Limited (TMPVL) and Tata Motors Commercial Vehicles (TMLCV). As a result, Tata Motors’ stock began trading ex-demerger, meaning the value of the commercial vehicle segment has been deducted from the main company’s share price.
For every one Tata Motors share held as of the record date, investors will receive one share of TMLCV. The fall in price simply reflects this value adjustment rather than any actual loss for shareholders. Following the change, Tata Motors’ market capitalisation stood at approximately ₹1.45 lakh crore.
Monday, October 13, was the last day to buy Tata Motors shares to qualify for the demerged company’s stock. The record date on October 14 determines which investors will receive shares in the new entity. Tata Motors operates under the T+1 settlement cycle, meaning trades settle the following business day.
Fresh futures and options (F&O) contracts for TMPVL began trading on Tuesday at 10 a.m., while trading in TMLCV will be introduced later after obtaining exchange approvals — a process that typically takes 45 to 60 days.
According to SBI Securities, the stock’s adjusted post-demerger value was expected to range between ₹285 and ₹384, aligning with the observed market behavior. Analysts emphasise that the demerger aims to unlock value and enable sharper business focus for both passenger and commercial vehicle segments.
While the visible drop might concern investors at first glance, market experts reassure that this is merely a technical price correction. Tata Motors’ fundamentals remain strong, and its future growth will depend largely on Jaguar Land Rover’s global performance and the profitability of its passenger vehicle arm.
