Mumbai, 7 April 2025: Ratan Tata-led Tata Motors is on the path of a big change. The company is going to split its commercial and passenger vehicle business into two separate listed entities. With this move, while the business of commercial vehicles like trucks and buses will be independent, on the other hand Jaguar Land Rover (JLR), electric vehicles (EVs) and passenger vehicles will come into a new entity. This decision will not only give a new direction to the company’s strategy, but will also prove to be important for the shareholders. Let us understand the 6 big updates related to this demerger.

Business will be split into two parts

Tata Motors has announced the splitting of its business into two parts. The first unit, Tata Motors Commercial Vehicles Limited (TMLCV), will focus on commercial vehicles—like trucks, buses and vans. The second unit, Tata Motors Limited (TML), will handle passenger vehicles, EVs and JLR. The company’s board has given the green signal to this plan, which is now awaiting approval from the shareholders. Tata Group Chairman N Chandrasekaran said, “This move will enable both businesses to better utilize market opportunities.” Shareholders’ meeting: When and how? To decide on this demerger, Tata Motors has called a shareholders’ meeting on May 6, 2025 at 3:00 pm (IST). This meeting will be held through video conferencing. Only those shareholders will be able to participate in it, whose names will be registered in the company’s register by March 28, 2025. Remote e-voting will run from 9:00 am on May 2 to 5:00 pm on May 5. Experts believe that this meeting will be the last chance for investors to express their opinion. Meaning of 1:1 share ratio If this plan passes, shareholders will get one share of TMLCV in exchange for every share of existing Tata Motors (face value Rs 2). That is, your stake will be equal in both the new companies. Stock market analyst Ajay Mehta says, “This ratio is fair for shareholders. This will not reduce their value, but will provide an opportunity to invest in two different segments.” When will the demerger be effective? According to the company’s Q3 FY25 investor presentation, this split could be effective by the third quarter of FY 2026—October to December 2025. Group CFO PB Balaji said, “If everything goes as planned, this process can be completed by October 2025.” However, NCLT and other regulatory approvals will be required for this, which may take time. Why is this split necessary? There are limited similarities in the commercial and passenger vehicle businesses, but there is scope to strengthen technical synergies—like electric mobility and software—between passenger vehicles, EVs and JLR. Automotive expert Ravi Sharma explains, “This demerger will give both units the freedom to focus on their respective strategies. This step is especially important considering Tata’s growing share in the EV segment.”

Shares status: Close to 52-week low

In the last trading session, Tata Motors’ stock closed 6% lower at Rs 615.10. Today, by 12 noon on BSE, it was down 8.59% at Rs 561.15. The stock has fallen 34% in the last 6 months, which is just 1.45% above its 52-week low (Rs 606.30). Market analysts say that pressure on the global auto sector and uncertainty of demerger could be the reason for this decline.

Way forward

This demerger could be a new beginning for Tata Motors. The commercial vehicle unit will benefit from the infrastructure boom, while the passenger vehicle unit will strengthen its hold in the EV and luxury segments. But the current weakness of the shares is a matter of concern for investors. Will this split take the company to new heights? The answer will be clear by the end of 2025.

Disclaimer: This article is for informational purposes only. Consult an expert before investing.