Tata Motors Share Falls 40% After Demerger: What Investors Should Know (Oct 2025)

Tata Motors Share Falls 40% After Demerger: What Investors Should Know (Oct 2025)

Published on October 14, 2025 | Current Time: 9:50 PM IST

Tata Motors, one of India’s leading automotive giants, has made headlines today as its share price underwent a steep decline of nearly 40 % following the completion of its much-anticipated demerger. But this dramatic drop is largely technical in nature, tied to corporate restructuring—rather than a sudden collapse in business fundamentals.

📉 What Happened: Why the 40% Drop?

• The sharp decline in share value is because Tata Motors began trading ex-commercial vehicle (CV) business from October 14, 2025. India Today+3The Economic Times+3The Economic Times+3

• Before the split, the company’s closing price was about ₹660.90. After adjustments, it opened around ₹399–₹400. Hindustan Times+4India Today+4Moneycontrol+4

• This is not a market crash—but a structural change: Tata Motors is separating its commercial vehicle arm into a new listed entity. The existing company will focus on passenger vehicles + EV + Jaguar Land Rover (JLR) business. Business Standard+4The Times of India+4Autocar India+4

• Shareholders holding Tata Motors shares as of the record date (October 14) will receive one share in the new CV entity for each share they hold. The Economic Times+5mint+5The Economic Times+5

🧐 Investment & Valuation Insights

• According to Nomura, the post-demerger valuations have been nearly split: target of ₹367 per share for the passenger vehicle side and ₹365 for the commercial vehicle side. Business Standard

• Analysts warn of near-term volatility, due to trading adjustments and investor uncertainty. The Economic Times+2The Economic Times+2

• The drop in price doesn’t necessarily mean destruction of value—investors need to evaluate the intrinsic strength of each separate business vertical (PV + JLR vs CV). Autocar India+3The Economic Times+3The Times of India+3

✅ What Should Investors Do?

1. Don’t panic sell: The 40% drop is technical. Evaluate real underlying business performance metrics (revenue, margins, growth in each segment).

2. Watch listing of CV arm: The new commercial vehicle entity (TMLCV) is expected to be listed soon; track how the market values it.

3. Focus on fundamentals: JLR’s recovery, EV market demand, domestic passenger vehicle growth will be key for the PV + JLR arm.

4. Use risk management: Due to volatility, it may be wise to stagger entry, or set stop-loss or target zones based on valuation metrics.