Tata Motors spin-off: Is the listed carmaker's stock worth investing with CV business spun off?

Tata Motors Blast: Tata Motors’ long-awaited demerger has finally entered its final leg, and the buzz has only grown stronger. The Tata group company and a leading Indian automaker has formally separated its commercial vehicle (CV) and passenger vehicle (PV) businesses into two independent entities. The PV arm – which houses the company’s electric vehicle (EV) business and Jaguar Land Rover (JLR) – trades independently on the Indian stock exchanges, while the CV arm’s listing is eagerly awaited by investors. Tata Motors Explosion Details Tata Motors has fixed the split ratio as 1:1. This means each shareholder will receive one share of TML Commercial Vehicles Ltd (TMLCV) for every share of Tata Motors held. The record date for the dismantling was 14 October. During the one-hour pre-market session held on the day, parent Jaguar Land Rover (JLR) changed hands at ₹400. The gap from Monday’s closing price of ₹660.75 implies a valuation of ₹260.75 per share for the standalone commercial vehicle unit. Tata Motors PV: Focused on cars, EVs and JLR The existing share of Tata Motors represents the passenger vehicle side of the business, which ranges from both Jaguar Land Rover and the domestic PV business that includes the ICE and EV segments. Along with this, the listed Tata Motors houses the investment in Tata Technologies. With this, the new Tata Motors will become a consumer and technology focused company. The PV business offers higher growth potential but also comes with increased risk due to its global exposure (via JLR) and significant ongoing investments in EVs, said Prashant Tapse, research analyst, senior vice president of research at Mehta Equities. He believes the listed PV segment is well placed to benefit from growing EV adoption in India, improving margins for JLR and a pipeline of premium product launches. Based on our analysis of financial performance, growth drivers and peer valuation multiples, the PV business is estimated to be valued at around ₹500 per share, opines Tapse. According to SBI Securities, Tata Motors Passenger Vehicle (TMLPV) stock is likely to trade between ₹285-384 post demerger. The broker believes that any potential upside remains dependent on the recovery in JLR volumes and improvement in profitability. CV arm spins off The spun-off arm of Tata Motors – TML Commercial Vehicle – will house the commercial vehicle business, along with other investments, including the stake in Tata Capital. Tapse said that the business is fundamentally cyclical, B2B in nature, and closely linked to overall economic activity and infrastructure development. Tata Motors has a strong leadership position in this segment, with a local market share of over 37%. Now with the purchase of stake in Inveco Group, the company will also make its presence known internationally. Based on financial metrics, growth prospects and peer valuation multiples, the standalone CV entity is estimated to be valued at around ₹400 per share, opines Tapse, adding that it is likely to attract investors looking for steady cash flow and cyclical value opportunities. Tata Motors Commercial Vehicle (TMLCV) shares will be renamed Tata Motors when they list on the stock exchanges, likely in November. Meanwhile, the PV arm’s business will list with TMPVL. With the split done, investors are asking a key question: Is the listed Tata Motors stock still a buy? Tata Motors Explosion Details (AI Image) Should you invest in listed Tata Motors shares? Harshal Dasani, Business Head, INVAsset PMS, said that Tata Motors’ recent demerger is a crucial transition. “This structural split is aimed at sharper capital allocation, operational efficiency and unlocking long-term value over independent growth cycles,” he added. Comment on the financials: “In Q1 FY26, the CV segment delivered an EBITDA margin of around 12.2%, despite a 4–5% decline in volumes, supported by disciplined cost control and a healthy product mix. The passenger and EV segments continue to benefit from rising domestic demand and India’s growing electric mobility ecosystem. However, with a certain margin of the JLR business, the company remains under pressure. revised to 5–7% for FY26, reflecting higher investment in next-generation EVs and product transitions.” In the medium term, Dasani sees both entities unlocking value through focused strategy execution and cleaner balance sheets. “Tata Motors remains attractive to long-term investors who believe in the company’s EV leadership, global diversification and ability to maintain double-digit operating margins,” he added. While Tapse views both entities as strong portfolio holdings, he believes the choice to choose one will depend on the investor’s risk appetite and investment horizon. From a fundamental perspective, Tapse finds that PV business offers greater upside potential, driven by strong growth levers and strategic positioning in the EV and luxury segments. On the other hand, the CV business offers more defensive characteristics, particularly attractive in a supportive macroeconomic and infrastructure-led growth environment, he added. Disclaimer: This story is for educational purposes only. The opinions and recommendations expressed are those of individual analysts or brokerage firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.