Tata Motors demerger, effective from October 1, 2025, has officially split the company into two listed entities — Tata Motors Passenger Vehicles Ltd, which houses Jaguar & Land Rover (JLR) and electric vehicle (EV) businesses, and Tata Motors Commercial Vehicles Ltd, which comprises the company’s commercial vehicle operations.
As per the Tata Motors demerger scheme, shareholders have received one share of Tata Motors CV for every share held, ensuring identical ownership across both entities.
TML Commercial Vehicles Ltd has now been officially renamed as Tata Motors Ltd. Earlier, the already listed Tata Motors Ltd was itself renamed as Tata Motors Passenger Vehicles Ltd (TMPV), as part of the same Tata Motors demerger scheme.
Investors now await the listing of the newly carved-out commercial vehicles arm, which is likely this month (November 2025), with focus shifting to its impact on the Indian stock market indices and passive fund portfolios once the stock begins trading.
Tata Motors Demerger Impact on Market Indices
Tata Motors demerger is expected to trigger some short-term technical adjustments in the key Indian stock market indices as the index providers will need to revise Tata Motors’ weightage and representation.
Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd explained that on the listing day of the Tata Motors CV entity, a dummy symbol with zero price will be temporarily included in all indices where Tata Motors is a constituent, including the Nifty 50, Nifty 100, and Nifty Auto.
“This step ensures that the overall index value (divisor) remains unaffected during the transition. Just like when Jio Financial Services (JFSL) was demerged from Reliance Industries (RIL) in July 2023, I assume a similar process may happen for Tata Motors CV, depending on regulatory approvals,” said Tapse.
He expects the new Tata Motors CV entity to list in the ₹280 – ₹350 range.
“When the new CV entity lists and begins trading, the index provider will replace the dummy entry with the actual market value of the newly listed company. This will simply be a rebalancing process; the combined value of Tata Motors (PV + JLR) and Tata Motors CV will remain broadly equal to the pre-demerger value of Tata Motors,” Tapse said.
According to Harshal Dasani, Business Head, INVasset PMS, Tata Motors Passenger Vehicles, given its higher market capitalization, is expected to retain index inclusion, while the CV arm’s eligibility will depend on its free-float and liquidity thresholds.
“If it falls short, it may be excluded in the next Nifty 50 or Sensex rebalance,” said Dasani.
Tata Motors Demerger: Impact on Passive Funds
For passive index funds and ETFs, portfolio adjustments will be required on the listing day to include the new Tata Motors CV stock.
“This may lead to temporary inflows or outflows and higher trading volumes in the CV shares, along with short-term volatility. However, fund managers are expected to hold Tata Motors Commercial Vehicles shares, anticipating better valuation clarity after the demerger and also assume fund manager to hold to PV shares as long term outlook remains optimistic,” Tapse said.
Dasani noted that passive funds that track these indices will realign their portfolios accordingly — either holding both stocks if both qualify or offloading the non-eligible one.
“While the overall economic exposure of investors remains unchanged, short-term volatility around listing and rebalancing is likely as index-linked flows adjust to the new structure. Over time, the split should enhance value discovery and sector-specific investor participation,” Dasani said.
Tata Motors Share Price Outlook
Analysts believe the Tata Motors demerger will not fundamentally affect index values but may cause brief volatility and technical adjustments.
“This is largely a mechanical process and not a reflection of any change in business fundamentals. Investors in Tata Motors need not be concerned,” Tapse summed it up.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
