From Tata Motors to Raymond: Why top Indian firms are taking demerger route

A wave of demergers is reshaping India Inc, with firms such as Tata Motors, Raymond, ITC and Aditya Birla splitting key units to unlock value and simplify structure

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India’s biggest business groups are increasingly restructuring their empires, separating diverse business units into independent listed entities. The move, with the latest entrant being Tata Motors, reflects a growing effort to increase shareholder value and attract sector-specific investors.

 

Tata Motors: The latest to join the wave

 

Automobile major Tata Motors has completed the demerger of its passenger vehicle (PV) and commercial vehicle (CV) businesses, a move announced earlier in March 2024. The company now operates as two separately listed entities -- one managing CVs and related investments and the other overseeing PVs, including electric vehicles (EVs) and Jaguar Land Rover (JLR).

 

Under the approved plan, shareholders will receive one share of the new CV company for every Tata Motors share held, with the legal split taking effect on October 1, 2025. According to Chairman N Chandrasekaran, the demerger will allow each arm to pursue independent growth strategies and enhance agility in decision-making. Analysts see this as a move to simplify structure, achieve clearer valuations and improve capital efficiency.     

 

Why companies are splitting up

 

Conglomerates are often valued at a “conglomerate discount”, typically 15-30 per cent lower than the combined worth of their individual businesses, because of complex structures and unclear capital allocation. By splitting into focused units, these companies aim to remove that discount and give investors a clearer picture of each business’s performance.

 

Demergers also help create pure-play entities, attract targeted investors and improve corporate governance. Markets have generally rewarded such simplifications, as seen in recent demergers across sectors from textiles and real estate to hotels and retail.

 

Raymond: Real estate arm shines post-demerger

 

  Raymond Ltd completed the separation of its real estate division, Raymond Realty, on May 1, 2025, with May 14 as the record date for allotting shares. Each Raymond shareholder received one share of Raymond Realty for every share held.

 

Raymond Realty has since delivered strong performance, posting a Q2 FY26 net profit of ₹60.2 crore, up from ₹4.92 crore a year earlier. Revenue jumped 208 per cent year-on-year to ₹696.5 crore, signalling investor confidence in the standalone entity.

 

ITC Ltd

 

In 2024, ITC Ltd demerged its hotel business into a new listed company, ITC Hotels, offering shareholders one share for every 10 ITC shares. ITC retained a 40 per cent stake in the new company.

 

ITC Hotels posted its first quarterly results post-demerger with a 41 per cent rise in net profit to ₹257 crore in Q4 FY25. Revenue grew 17 per cent to ₹1,060.6 crore, showing strong operational growth after gaining independence. For the full year, the company reported a net profit of ₹634.5 crore on revenue of ₹3,559.8 crore.     

 

Aditya Birla Lifestyle: Strong debut after split

 

Aditya Birla Lifestyle Brands Ltd (ABLBL), demerged from Aditya Birla Fashion and Retail, debuted on the stock exchanges on June  23, 2025. The stock opened at ₹167.75 and closed at ₹159 on the day, valuing the company at nearly ₹19,450 crore.

 

For the September quarter of FY26, ABLBL reported a net profit of ₹23.44 crore, compared to a loss of ₹58.77 crore a year earlier. Revenue rose 3.7 June 23 to ₹2,037.9 crore, marking its second consecutive profitable quarter since the listing.

 

The road ahead

 

The trend of demergers among large Indian conglomerates shows no signs of slowing. As Tata Motors completes its restructuring and companies like Raymond, ITC and Aditya Birla report stronger post-listing numbers, analysts expect other groups, such as Vedanta and Reliance to follow in the same footsteps.