Tata Motors shares have experienced a slip in value as investors approach the record date for debenture holders, set for tomorrow, October 10, 2025. This decline reflects a cautious market sentiment ahead of the demerger, which officially took effect on October 1, 2025.

Demerger Details

The demerger involves splitting Tata Motors into two separate entities: TML Commercial Vehicles Limited (TMLCV) and Tata Motors Passenger Vehicles Limited. The latter will encompass the Jaguar Land Rover (JLR) business. The record date of October 10, 2025, is crucial for determining eligible debenture holders for the transfer of Non-Convertible Debentures (NCDs) worth ₹2,300 crore to TMLCV. A subsequent record date, October 14, 2025, has been fixed to ascertain the shareholders who will be allotted shares in TMLCV.

The share entitlement ratio for the demerger is 1:1. This means that for every share held in Tata Motors, shareholders will receive one fully paid-up share of ₹2 in TMLCV. The equity shares allotted by TMLCV are proposed to be listed on both the BSE Limited and the National Stock Exchange of India Limited, pending necessary regulatory approvals.

Market Performance

Tata Motors shares have been under pressure, with a nearly 7% drop over the past five sessions. On October 9, 2025, the stock closed at ₹669 per share on the BSE. This decline is attributed to investor concerns surrounding the separation of the commercial and passenger vehicle businesses. Some analysts suggest that the stock's price-to-earnings (P/E) ratio, standing at 11.60, is significantly lower than the industry average, indicating a potential undervaluation.

Over the past year, Tata Motors has experienced a decline of 27.93%, contrasting with the Sensex's modest gain of 0.40%. However, the company has shown resilience over longer periods, with a remarkable 388.84% increase over the past five years, outperforming the Sensex's 101.91% growth in the same timeframe.

Jaguar Land Rover Sales

Tata Motors' UK subsidiary, Jaguar Land Rover, reported a decline in Q2 FY26 sales. Wholesale volumes fell 24.2% year-over-year to 66,165 units, while retail sales declined 17.1% year-over-year to 85,495 units. This downturn is partly attributed to a cyber incident and the phasing out of legacy Jaguar models.

Demerger Implications for Investors

Investors holding Tata Motors shares as of the record date will receive shares of both companies in the 1:1 ratio. The share price of Tata Motors will adjust on the ex-date, October 14, 2025, to reflect the new corporate structure. Once both entities are listed, shareholders will see the shares of Tata Motors Passenger Vehicles and TML Commercial Vehicles credited to their demat accounts.

The demerger represents a significant structural change for Tata Motors, separating its commercial vehicle and passenger vehicle businesses into distinct entities. While the stock has shown short-term weakness, it remains a strong performer over a multi-year horizon.