Ratan Tata’s 27 year-old vision comes true as Tata Motors demerger completes with trucks business listing

Tata Motors Ltd, formerly known as Tata Motors Commercial Vehicles, started trading on stock exchanges on Wednesday after its truck and bus business was separated from Tata Motors Passenger Vehicles Ltd, which currently houses its automobile business, including its British unit Jaguar Land Rover.

Shares of commercial vehicle business, including recent acquisitions The Iveco business began trading at a 28% premium to the discovered price on Wednesday. ₹335 each.

The passenger vehicle business, which began trading separately on October 14, also opened in green, then turned red on October 14. ₹It decreased by 0.75% compared to the previous close, reaching 404.55.

At these prices, the market value of Tata Motors is approximately ₹Around 1.2 trillion and Tata Motors Passenger Vehicles ₹1.5 trillion. Before the demerger, the undivided Tata Motors was valued as follows: ₹2.4 trillion on October 13; This represents a 12.5% ​​increase in the post-split value of the organizations.

Ratan Tata predicted that such a value would emerge 27 years ago. “In the future, we may split the company into two business units,” the former Tata Group chairman said in an interview with The Guardian. Time magazine in 1998.

The then sixty-year-old was speaking after Tata Motors, then known as Telco, made its most ambitious gamble with a $400 million investment to develop the Tata Indica, a small car.

Superior measurements

N Chandrasekaran, chairman of Tata Sons and Tata Motors, admitted that the demerger was not easy and took several years to implement.

“It was clear to me 8-9 years ago that these companies had to have different paths,” he said while speaking at the listing ceremony held at BSE’s iconic trading floor in South Mumbai. “And they have the right to pursue different passions.”

Before splitting off its auto major, he said, the company needed to make sure each of the two halves was ready for the split. The commercial vehicle business was always profitable and cash flows financed investments in the passenger vehicle business.

He said that the group now has two strong and independent automotive companies.

The financial metrics of newly listed commercial vehicle business Tata Motors Ltd will be superior and will deliver smart returns on invested capital, Chandrasekaran said.

This will help the company make bold moves, including the acquisition of Italian truck maker Iveco. The acquisition should be completed within a few months, pending all regulatory approvals, the official said.

Tata Motors started out making trucks over eighty years ago as the Tata Engineering and Locomotive Company, better known as Telco. It was renamed Tata Motors in 2003. The commercial vehicle business has retained this name today.

Close to Tata’s heart

The passenger vehicle business, which has grown meaningfully under Ratan Tata’s leadership, has finally become an independent company, as the late corporate leader had dreamed of nearly three decades ago.

Passenger vehicle business accounted for over 82% of Tata Motors ₹While 4.4 trillion revenues were generated in fiscal 2025, the contribution of the commercial vehicle unit was approximately 18%. ₹75,055 crore.

Tata Motors’ board decided in August 2024 that the separation of the businesses would enable better strategic focus and returns for shareholders; this plan was later approved by the National Company Law Tribunal.

For Chandrasekaran, making success in the automobile business is a key goal, as he himself admits.

The president has spoken Ratan Tata, chairman emeritus of the group, passed away last October at Tata Motors’ annual general meeting in June this year.

“I have had the opportunity to constantly share business updates with Ratan Tata over the last few years. While we all miss him, I want you to know that he would have been very proud of the turnaround of the business as Tata Motors was so close to his heart,” Chandrasekaran told shareholders.

According to a PTI report dated April 2018, Ratan Tata had expressed his regret that Tata Motors was seen as a failed company.

“I am saddened that we have lost market share in the last four to five years and have become what the country sees as a failed company,” Tata was quoted as saying.

resume plan

Tata Motors’ commercial vehicle business, the country’s largest seller of trucks and buses, faces the dual challenges of navigating a challenging domestic market and integrating the new Iveco business it acquired in July for $4.4 billion.

The Iveco acquisition, for which it received a bridge loan, is expected to be completed by April 2026. The Tata Motors-Iveco joint venture is expected to sell more than 540,000 vehicles annually and generate revenues of more than $25 billion.

Domestically, the company has to deal with the challenges of the stagnant commercial vehicle market, which is expected to recover from the second half. Between April and September this year, Tata Motors’ total CV sales fell 0.9% to 156,973, according to data from the Association of Indian Automobile Manufacturers.

Analysts state that after the split, both the passenger vehicle and commercial vehicle businesses may try to create synergies.

“The CV business can focus on improving profitability through scale, electrification and exploring R&D synergies (with the acquisition of IVECO being a recent example),” Ambit Capital analysts Amey Dargude, Raghvendra Goyal and Viraj Sanghvi wrote in an Oct. 14 note.

“The PV (including EV) and JLR businesses will focus on premiumisation, technology collaborations and strengthening their global brand presence,” analysts added.

Both companies will now have separate management. Girish Wagh runs Tata Motors CV, while Shailesh Chandra heads the passenger vehicle business.

“The stock is likely to be traded between: ₹320-470 post list. The domestic CV industry is likely to start recovering in 2HFY26 due to tailwinds such as reduction in GST rate on CVs from 28% to 18%, renovation demand and pick-up in infrastructure, construction and logistics sectors,” SBI Securities analysts Sudeep Shah and Sunny Agrawal said in an Oct 13 note.

“The integration of Iveco Group NV will most likely expose the company to the global CV cycle in FY27.”