Did Tata Motors Really Crash by 40%? Here’s All You Need to Know

Tata Motors shares seemed to crash nearly 40% in a single day. On October 14, 2025, the stock opened at around ₹399, compared to its previous close of ₹660.90. At first glance, this looks like a huge fall. But the truth is more structured and less alarming than it seems. The sharp drop was mainly due to the company’s restructuring and not because of any sudden loss in business value.

1. The Real Reason Behind the “Crash”

The fall in Tata Motors’ share price was not because the company lost value overnight. It happened because of a demerger, a process where a company splits into two separate businesses.

Tata Motors had decided to separate its Passenger Vehicles (PV) business and its Commercial Vehicles (CV) business. This plan is part of a Composite Scheme of Arrangement approved by the National Company Law Tribunal (NCLT) in August and September 2025. We had earlier explained this entire demerger plan and its structure in detail here.

2, When Will Investors Get Shares in the New Commercial Vehicles Entity?

After the demerger, shareholders of Tata Motors are entitled to receive shares in the newly formed TML Commercial Vehicles Ltd (TMLCV), which will soon be renamed Tata Motors Ltd.

The company had already set the record date earlier to decide who will receive these shares. If you held Tata Motors shares on that record date, you will automatically be allotted shares of the new commercial vehicles entity in your demat account.

The actual credit of these shares is expected to happen in the coming weeks, now that the name change process has been completed. After this, the company will move towards listing the commercial vehicles business as a separate entity on the stock exchanges.

Based on similar past demergers, the listing typically takes 4-8 weeks from the effective date, though the exact timeline depends on regulatory clearances and stock exchange approvals. Once listed, these shares will start trading separately, and investors will be able to see the independent value of their CV business holdings along with their passenger vehicle shares.

3. How the Price Dropped 40%

Before the demerger, Tata Motors shares traded at around ₹660.90. After the split, the stock price adjusted to ₹399, a fall of almost 40%. This drop is not a real loss in value. Instead, it is because the business was divided into two separate entities: the Passenger Vehicles (PV) business, now called Tata Motors Passenger Vehicles Ltd, and the Commercial Vehicles (CV) business, which will soon be renamed Tata Motors Ltd again.

Investors received shares in both businesses. So the total value of their holdings remains largely the same, just split across two different stocks. Think of it like cutting a cake into two equal halves, the cake isn’t smaller, it’s just divided.

4. Latest Company Update: Name Change

On October 13, 2025, the Ministry of Corporate Affairs issued a certificate approving the change of name. The original “Tata Motors Ltd” is now officially known as Tata Motors Passenger Vehicles Ltd (TMPV). The commercial vehicle business (TMLCV) will adopt the Tata Motors name soon. This update confirms that the demerger is now fully in place, and both companies will trade separately going forward.

5. Broader Market Context

It’s also important to remember that Tata Motors’ stock was already under pressure before this event.

• The stock had fallen around 43-44% from its 52-week high of ₹1,179 (July 2024).
• This fall was due to weaker performance in its Jaguar Land Rover (JLR) business, margin pressures, and global market challenges.
• There were also concerns around demand and export conditions in key markets.

6. What Investors Should Focus On Now

Going forward, there will be two separate listed companies, each with its own focus. 

Tata Motors Passenger Vehicles (TMPV) will focus on electric vehicles (EVs), the revival of JLR, and domestic passenger cars. The Commercial Vehicles entity, which will later take on the Tata Motors name, will focus on commercial vehicles, trucks, and buses. 

Investors will need to track both stocks to understand the total value of their investment. Short-term price volatility is expected as the market digests the split, but this separation is meant to unlock value in the long term by allowing each business to focus on its strengths.

If you missed the earlier updates on how the demerger was structured and the record date for allocation, you can read our detailed breakdown here.

7. Bottom Line

The 40% fall in Tata Motors’ share price is not a sudden crash. It is a planned restructuring, a result of dividing the company into two parts. The latest name-change update simply confirms the new structure, not a new negative development. For investors, this is a moment to understand the new structure, not panic. The real story is not about a collapse, but about a strategic split that aims to give both businesses a clearer identity and focus.

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