Tata Motors shares experienced a significant drop of over 40% on October 14, 2025, following the company's demerger into two distinct entities. The stock opened at Rs 399 on the Bombay Stock Exchange, a sharp decline from the previous closing price of Rs 660.90. This drastic fall is attributed to the official separation of Tata Motors' commercial vehicle and passenger vehicle businesses, resulting in the formation of Tata Motors Passenger Vehicles Limited (TMPVL) and Tata Motors Commercial Vehicles Limited (TMLCV).

The demerger means that the original Tata Motors stock now solely represents the passenger vehicle segment, which includes the domestic passenger vehicle business, Jaguar Land Rover, and other investments. The commercial vehicle division has been established as a new entity, TMLCV, which will include the domestic commercial vehicle business and the Iveco business.

Market experts have indicated that the decline in share price is a technical adjustment following the demerger and does not reflect a loss in overall company value. They noted, "The steep fall in Tata Motors' shares is purely technical and not a cause for concern."

As of October 14, Tata Motors shares closed at Rs 395 on the National Stock Exchange, with a market capitalisation of Rs 1.46 lakh crore. Shareholders who held Tata Motors shares as of October 13 will receive one share of TMLCV for each share they owned. The listing date for TMLCV has yet to be confirmed, but it is expected to occur within 45 to 60 days after the regulatory filing, potentially by mid-November 2025.

In a related development, Tata Investment Corporation shares also saw a dramatic decline of nearly 90% on the same day due to a 1:10 stock split. The shares opened at Rs 1,042, down from Rs 9,922, but later rebounded to Rs 1,080. This adjustment was purely technical, reflecting the stock split rather than a loss in value.

Overall, both Tata Motors and Tata Investment Corporation are undergoing significant structural changes, which have led to notable fluctuations in their share prices. Investors are advised to stay informed about these developments as the companies adjust to their new structures.