Tata Motors, the passenger car giant of the Tata Group, has announced the allotment of shares to eligible investors as part of its demerger scheme. From October 14th, Tata Motors company has been split into two entities, namely Tata Motors Passenger Vehicles and TML Commercial Vehicles. The PV unit is trading as Tata Motors on exchanges, while the listing date is yet to be known for TML Commercial. Due to the demerger, Tata Motors' share price is down by 47% YTD. Should investors worry? And how will short-term and long-term capital gains taxes be applied to investors' portfolios post-demerger?
Tata Motors Share Price:
After market hours on October 17, Tata Motors share price closed at Rs 396.95 apiece on BSE, up by 1.6% with market cap of Rs 1,46,170.14 crore. Post demerger record date, the stock's 52-week high and low is adjusted to Rs 570.57 apiece and Rs 335.30 apiece respectively.
However, after the demerger record date, Tata Motors share price has corrected significantly and is down by 47.09% on BSE.
Should Investors Worry About Latest Tata Motors Shares Correction?
Investors should not worry about the latest drop in Tata Motors shares YTD.
According to Kotak Securities explainer, here's what will happen to your portfolio:
After Demerger Record Date (October 14)
⦁ Your Tata Motors shares continue as usual ⦁ Market Price will drop to reflect the split ⦁ Your average buy price stays unchanged for now ⦁ You'll see a temporary dip in your unrealized P&L
TML Commercial Vehicles Listing In 45 Days:
-New TML Commercial Vehicles shares will be credited to your demat account
-Your Tata Motors average buy price will be adjusted automatically
-Your portfolio will show both holdings
Here's an example by ZERODHA's website, if you bought 100 shares at Rs 950 each ( Rs 95,000 total) and the value splits 60:40, your adjusted cost prices become Rs 570 per Tata Motors share (60% of Rs 950) and Rs 380 per Tata Motors Commercial Vehicles share (40% of Rs 950). The combined cost remains Rs 950, divided between two stocks.
Tata Motors Demerger Allotment:
As per the regulatory filing, TML Commercial Vehicles has announced the allotment of 3,68,23,31,373 fully paid-equity shares of face value of Rs 2/- each to the equity shareholders of the Company in the ratio of 1:1 pursuant to the Scheme.
Also, TMLCV has declared cancellation and reduction of the entire pre-Scheme paid-up share capital of TMLCV comprising 5,00,000 (Five Lakh) fully paid-up equity shares of Rs 2/- each, which were entirely held by the Company.
It said, "TMLCV shall take necessary steps to obtain listing and trading permission of the aforesaid equity shares, as allotted today, from BSE Limited and National Stock of India Limited in due course."
TMLCV shares are expected to list in November 2025.
Tax implications On Tata Motors Demerger:
According to Zerodha's website, your holding period counts from your original Tata Motors purchase date, not the demerger date. Tax applies only when you sell:
Nomura Target Prices For Tata Motors & TML Commercial Vehicles:
The global brokerage house has assigned its split target prices on both Tata Motors Passenger Vehicles and TML Commercial Vehicles. The split targets are almost even with Rs 367 target set on PV entity and Rs 365 target recommended for CV entity which is yet to be listed.
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