Tata Motors demerger: How the split will unlock value for investors & Tatas

Tata Motors Demerger: Analysts say the listing of two separate entities will be a decisive step toward unlocking value for both investors and the Tata Group. Read to find out how

Tata Motors demerger: Tata Motors' demerger, which will create two independently listed powerhouses -- one focused on passenger vehicles and electric mobility, and the other on commercial vehicles – is in the final stages of completion. 

 

With the CV arm already demerged, and its value adjusted in the incumbent Tata Motors stock on the record date (October 14, 2025), its listing is widely expected in November 2025. Analysts say the listing of two separate entities will be a decisive step toward unlocking value for both investors and the Tata Group.

Tata Motors demerger

Under the approved scheme, the existing listed company has been renamed as Tata Motors Passenger Vehicles Ltd (TMPVL), housing the passenger vehicle (PV), electric vehicle (EV), and Jaguar Land Rover (JLR) businesses, along with a 53.4 per cent stake in Tata Technologies. 

 

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The newly created Tata Motors Commercial Vehicles Ltd (TMLCV), meanwhile, will hold the commercial vehicle (CV) operations, Tata Daewoo, Smart City Mobility, and a 4.7 per cent stake in Tata Capital.

 

Shareholders have received one share of TMLCV for every Tata Motors share held as on the record date. 

 

On the share price front, a special session to discover the share price of the two entities pegged TMPV stock's value at ₹400 and TMLCV stock value at ₹261.

 

Analysts at SBI Securities, however, think Tata Motors' commercial vehicle arm could list between ₹320 and ₹470 per share, while TMPVL may trade between ₹285 and ₹384.   ALSO READ | Tata Motors demerger: CV shares entitlement, swap ratio, listing timeline

Tata Motors demerger: How will it unlock value for shareholders?

According to analysts, the Tata Motors demerger is a structural move that separates two fundamentally different businesses -- the fast-growing passenger EV and luxury franchise (Tata Motors + JLR), and the cyclical CV business. 

 

With the demerger, Tata Motors aims to have a sharpened focus on two separate vehicle businesses, instead of being one bulky carrier.

 

"The split removes the 'conglomerate discount', often applied by markets, allowing each arm to be valued on its own merits,” said Jahol Prajapati, research analyst at SAMCO Securities.

 

The passenger vehicle and EV vertical, he said, benefits from strong brand momentum, a clear electrification roadmap, and premium leverage through JLR. This business is innovation-led and commands higher valuation multiples globally, he added.

 

"Meanwhile, the commercial vehicle division is entering a healthier demand cycle, supported by infrastructure spending and fleet upgrades. Its cash-generation strength becomes more visible when it’s no longer masked by the capital-intensive EV transition," Prajapati said.

 

Ambit Capital, too, believes the spin-off aligns with sector cycles. 

 

"The CV business, with market leadership and healthy free cash flow generation, is better positioned to capitalise on the demerger. We expect immediate value unlocking for the CV unit, with global synergies from the Iveco acquisition providing further re-rating potential," the brokerage said in October report.  ALSO READ | Tata Motors CV: Can the demerged entity hold its edge against peers? 

Additionally, analysts say the demerger offers clarity and flexibility. "The market can finally value each business on its own -- growth-rich through EVs and premium mobility, or cash-rich through commercial vehicles," said Prajapati. 

 

The move will also make capital allocation and leadership accountability more transparent, helping attract targeted investors for each segment, he added.

 

Analysts said TMPV's portfolio will appeal to those investors seeking exposure to the EV transition and luxury mobility, while TMLCV will attract investors favouring cyclical recovery, stable cash flows, and infrastructure-driven growth.

 

Financially, Tata Motors continues to lead the medium and heavy commercial vehicle (MHCV) segment, although it has lost around market share in the light CV (LCV) segment by seven percentage points over FY23-25, primarily due to a consumer shift toward pick-ups over small commercial vehicles (SCVs, <2 tons). 

 

The management has recognised this trend and is taking steps to strategically address product gaps, enhance product competitiveness, and expand EV reach. 

 

It has guided for long-term targets of 40 per cent market share, mid-teens margins, and 7-9 per cent free cash flow (FCF) generation in the CV segment. 

 

As for the PV business, the Indian PV segment turned around post FY20, emerging as the third largest PV player in FY25. Its market share grew to 14 per cent from ~5 per cent in FY20, and it is establishing itself as the domestic EV leader (nearly 55 per cent EV market share as of FY25).   ALSO READ | Tata Motors demerger: Key things every investors should know before listing

Benefits for Tata Group

For the Tata Group, the demerger fits within a broader restructuring agenda aimed at simplifying corporate structures, improving governance, and boosting shareholder returns. By allowing independent fundraising and strategic partnerships - especially in clean mobility and global commercial vehicle markets - the group positions both businesses for sustainable long-term growth.

 

Analysts at Ambit Capital noted that the move mirrors global auto giants like Daimler and Volvo that unlocked value through separation. 

 

"For Tata Motors, it signals a new phase of growth - one that promises sharper execution, stronger investor appeal, and the freedom to accelerate innovation," it said.