Tata Motors Demerger: Shareholders Approve Plan to Split It Into Two Listed Companies

On Tuesday, Tata Motors announced that its shareholders had approved the plans to split it into two listed companies, making separate arms for passenger and commercial vehicles. The automaker in March confirmed it would separate its commercial vehicle arm from its passenger vehicle business, which comprises its cash cow luxury Jaguar Land Rover, to unlock better growth prospects in the market. 

When Will the Demerger of Tata Motors Happen?

While the voting for approval of the company's demerger has already been completed, the split will require some time. The demerger of Tata Motors is expected to be completed by Q3 of FY26. It means Tata Motors aims over a year to separate these two divisions and list them on the stock exchange. 

What Was the Decision of the Shareholders?

In its exchange filing, Tata Motors stated that the proposal, which will offer shareholders equal stakes in both the listed organizations, was approved with a whopping 99.9995% of votes in favor of the demerger. This was one of the rarest conditions when close to 100% of votes were made in favor of a major corporate decision.

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Is It True that Tata Motors Will Be Divided Into Two?

Many still wonder if Tata Motors will be divided into two listed companies. However, it's happening for real and is a significant move from Tata to focus on its passenger vehicle segment and take a lead position in India's competitive automobile market. After the demerger, one of its entities will deal with the passenger vehicle business, including EVs and the luxury brand Jaguar Land Rover. 

On the other hand, another entity will be its Commercial Vehicle unit, which will handle the truck and bus business. Every shareholder of Tata Motors will receive one share of the new CV company (TMLCV) for every Tata Motors (TML) share they already own. Both shares will have a face value of Rs 2. 

Tata Motors Share Price & Performance

Before the official demerger, the Tata Motors share had already started performing and seen a surge in its market price, gaining 9% in just two days and rising 16% in the last month. However, the stock is still recovering and is down 15% over the past six months, falling 32% in a year. 

Talking about performance, Tata Motors is gearing up to announce the Q4 result on May 13, and on the same day, it will also announce the dividend for FY25. This will indicate the company's performance before its official demerger into two entities.