Tata Motors Shares increases over 2% as Demerger Vote Nears

Tata Motors shares rose over 2% to ₹661 on Monday, May 5, ahead of a key shareholders’ vote on the proposed demerger. Investor sentiment was also buoyed by reports indicating a potential resumption of Jaguar Land Rover (JLR) shipments to the U.S., adding to the stock's momentum.

Key Vote on Demerger Scheduled

A pivotal moment in Tata Motors' planned business split is set for Tuesday, May 6, 2025, when equity shareholders will convene for a meeting via video conferencing or other audio-visual means. The purpose of this meeting is to consider and potentially approve a Composite Scheme of Arrangement.

The demerger plan, initially announced in March 2024, involves separating Tata Motors' Commercial Vehicle (CV) business from its Passenger Vehicle (PV) operations. Under the proposed Scheme, the Commercial Vehicle undertaking, including its assets, liabilities, employees, and related investments, will be demerged into TML Commercial Vehicles Limited (TMLCV). Concurrently, the existing Passenger Vehicle business, currently within Tata Motors Passenger Vehicles Limited (TMPV), will be merged into the existing listed entity, Tata Motors Limited (TML). Upon the Scheme becoming effective, both entities will be renamed. The Commercial Vehicle business and its related investments will operate under the name TML, while the entity encompassing the Passenger Vehicle business, Electric Vehicle, Tata Passenger Electric Mobility (TPEM) business, JLR, and their related investments will be known as TMPV.

This strategic move follows a period where the CV, PV+EV, and JLR businesses have operated independently under separate CEOs since 2021, each implementing distinct strategies that have reportedly contributed to strong performance over the past few years.

For existing shareholders, the demerger proposes a straightforward share entitlement ratio. Shareholders of Tata Motors Limited (TML) are set to receive One share of TMLCV, with a face value of ₹2/- and fully paid up, for every ONE fully paid-up share of ₹2/- held in TML of the same class. This effectively means shareholders will hold identical proportionate shareholding in both the resulting listed entities. Only equity shareholders recorded in the Register of Members as of the Cut-Off Date, Friday, March 28, 2025, are entitled to attend and exercise their voting rights at the meeting. A remote e-voting period for eligible shareholders commenced on Friday, May 2, at 9:00 am and will conclude today on Monday, May 5, at 5:00 pm.

JLR Resumes US Exports

Reports suggest that Tata Motors’ subsidiary Jaguar Land Rover (JLR) has resumed vehicle shipments to the U.S., with the first consignment reportedly leaving the UK last Wednesday after a month-long pause. Shipments were earlier halted in April following the imposition of a 25% import tariff by the U.S. government. While the U.S. is JLR’s second-largest export market after the EU, the company has not officially confirmed the resumption. Unverified reports and ongoing trade policy discussions continue to cloud the full impact on automakers.

The confluence of the impending demerger vote and the reported developments regarding JLR's key export markets underscores the factors influencing investor sentiment around Tata Motors shares this week

Disclaimer: This news is solely for educational purposes. The securities/investments quoted here are not recommendatory.

To read the RA disclaimer, please click here