Tata Motors Demerger: What will Happen to Shares? Know All Details

Tata Motors Demerger: Tata Motors Limited has split the company’s passenger and commercial vehicle businesses into separate listed entities. The Ministry of Corporate Affairs has issued a fresh Certificate of Incorporation on October 13, 2025, formally changing the name of India’s largest automaker from “Tata Motors Limited” to “Tata Motors Passenger Vehicles Limited”. 

Under the restructuring scheme, the commercial vehicles division has been demerged into TML Commercial Vehicles Limited, which will subsequently change its name to “Tata Motors Limited”. The passenger vehicle entity will retain all passenger car operations, electric vehicle business, and the luxury Jaguar Land Rover division.

The demerger became effective from October 1, 2025, following approval from the National Company Law Tribunal Mumbai Bench through orders dated August 25, 2025, and September 10, 2025. This marks the fourth major name change in the company’s 80-year history. The automotive manufacturer was originally incorporated as “Tata Locomotive and Engineering Company Limited” on September 1, 1945. The company underwent its first name change in 1960, becoming “Tata Engineering and Locomotive Company Limited,” commonly known as TELCO.

The second name change occurred in 2000, when TELCO was renamed “Tata Engineering Limited”. The most recent previous change took place on August 4, 2003, when the company adopted the name “Tata Motors Limited”. At that time, Chairman Ratan Tata explained the rationale, stating that “Tata Motors Ltd defines the business we are in,” as engineering was merely a capability rather than the core business.

The current restructuring creates two focused entities: Tata Motors Passenger Vehicles Limited will handle cars, SUVs, electric vehicles, and Jaguar Land Rover operations, while the new Tata Motors Limited will concentrate on commercial vehicles including trucks, buses, and pickup vehicles. This separation aims to unlock value and provide clearer business focus for each segment in India’s competitive automotive market.

Shareholders holding Tata Motors shares on the record date of October 14, 2025, will receive one share each in both the passenger vehicle and commercial vehicle entities.For every 1 share of Tata Motors you hold, you will receive 1 share of Tata Motors Commercial Vehicles (TMLCV). If you bought shares on or before October 13, 2025, you qualify for the demerger. For example, if you own 100 Tata Motors shares, you will continue holding 100 Tata Motors shares and receive 100 shares of Tata Motors Commercial Vehicles. The record date is October 14, 2025.

The company has not yet announced the cost of acquisition (COA) ratio. For example, if you bought 100 shares at ₹950 each (₹95,000 total) and the value splits 60:40, your adjusted cost prices become ₹570 per Tata Motors share (60% of ₹950) and ₹380 per Tata Motors Commercial Vehicles share (40% of ₹950). The combined cost remains ₹950, divided between two stocks.

Trading timeline: What you need to Know

• Tata Motors (October 14, 2025): A special pre-open session will open from 9:00 AM to 9:45 AM where you can place, modify, or cancel orders. Order matching happens at the end of the session. Regular trading resumes from 10:00 AM to 3:30 PM.
• Tata Motors Commercial Vehicles (TMLCV): Shares will be credited to your demat account within 30-45 days from the record date. CDSL will email you once they credit the shares. The exchange will list Tata Motors Commercial Vehicles separately on NSE and BSE after regulatory approvals, with the exact listing date announced through a separate circular.
• F&O contracts: All existing F&O contracts expiring in October, November, and December will expire on October 13, 2025, and be reintroduced with a revised lot size from October 14, 2025, after the special pre-open session as per NSE circular.

Do you need to pay any Tax?

Your holding period counts from your original Tata Motors purchase date, not the demerger date. Tax applies only when you sell:

• Long-term holdings (>12 months): 12.5% tax on gains above ₹1.25 lakh
• Short-term holdings (<12 months): 20% tax