New Delhi: Tata Motors’ stock experienced a significant drop of nearly 7 percent over the past month and over 11 percent in 2025, following a remarkable 420 percent rally over the last five years. This decline is attributed to the company’s demerger of its commercial vehicle (CV) business, with shares opening at Rs 400 on the NSE on October 14, 2025. The stock then dipped nearly 2 percent to Rs 391.35.
Earlier this month, Tata Motors announced October 14 as the record date for determining shareholder eligibility for the demerger. Eligible shareholders will receive one share of the newly formed Tata Motors Commercial Vehicles Ltd (TMLCV) for every share of Tata Motors they own. The demerger became effective on October 1, 2025, and TMLCV shares are expected to begin trading on the BSE and NSE in November.
The demerger, approved by Tata Motors’ board in August 2024, aims to create two focused entities: Tata Motors Passenger Vehicles Ltd (TMPVL) and TMLCV. This strategic move is designed to sharpen business focus and capitalize on future growth opportunities in their respective segments.
Despite the short-term volatility, the demerger is expected to unlock value for shareholders by allowing each entity to pursue its growth trajectory independently. Investors are advised to consider the long-term potential of both TMPVL and TMLCV rather than focusing solely on the immediate market fluctuations.
In summary, the 40 percent drop in Tata Motors’ share price is a result of the stock adjusting to the demerger of its CV business. This adjustment is a normal part of corporate restructuring and should be viewed in the context of the company’s long-term strategic goals.