Stock down 8% in seven sessions and 10.8% in 2025; analysts flag near-term volatility due to uncertainties around JLR recovery and valuation reset post demerger.
13 Oct 2025 | 5710 Views | By Darshan Nakhwa
Tata Motors Ltd’s shares extended their decline on Monday, falling for the seventh consecutive session as investors braced for a valuation reset after the automaker’s demerger and assessed the fallout from a cyberattack that halted production at Jaguar Land Rover (JLR).
On Monday, the automaker’s stock closed 2.7% lower ...
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Tata Motors Ltd’s shares extended their decline on Monday, falling for the seventh consecutive session as investors braced for a valuation reset after the automaker’s demerger and assessed the fallout from a cyberattack that halted production at Jaguar Land Rover (JLR).
On Monday, the automaker’s stock closed 2.7% lower at ₹660.90 on the BSE, extending its losing streak to about 8% over the past seven sessions. So far in 2025, the stock has declined by nearly 10.8%.
The slide comes at a pivotal moment for India’s largest automobile maker by revenue, which has split its passenger and commercial vehicle businesses into two independent entities, a structural shift that brokerages say will unlock long-term value but also trigger near-term volatility.
Valuation Reset
Last week, Tata Motors announced that its composite scheme of arrangement involving TML Commercial Vehicles (TMLCV) and Tata Motors Passenger Vehicles Ltd (TMPV), along with their respective shareholders, became effective on October 1 following approval from the National Company Law Tribunal’s Mumbai bench.
The company has set October 14 as the record date to determine eligible shareholders who will receive one fully paid-up share of TMLCV for every share held in Tata Motors.
The move will result in two distinct listed entities: Tata Motors Passenger Vehicles Ltd, housing the passenger vehicles, electric vehicles, and JLR businesses; and Tata Motors Ltd, which will continue the commercial vehicle operations.
“Once the list of eligible shareholders of TML is finalised, shares in Tata Motors Ltd Commercial Vehicles will be allotted and subsequently listed on the BSE and NSE,” the company said in an exchange filing. “During the period between the allotment of shares by TMLCV and their listing on the exchanges, these shares will not be available for trading. The process of securing listing and trading approvals typically takes 45-60 days from the date of filing the necessary applications with the stock exchanges.”
Brokerages, however, cautioned that the period between the record date and the listing of the CV business, which is expected in early November, could see heightened volatility. “The CV business will be carved out and listed by early November, potentially causing short-term stock volatility due to PV-only revaluation till the CV entity is listed,” JM Financial said in a note. It expects valuation adjustments as the market recalibrates Tata Motors’ PV-focused business in the interim.
Meanwhile, the company has also restructured its leadership to steer the two businesses independently. Girish Wagh will become Managing Director & CEO of the commercial vehicles entity, while Shailesh Chandra will lead the passenger vehicle entity, and continue as MD of Tata Passenger Electric Mobility Ltd.
According to Tata Motors, the split will enable “sharper strategic focus, improved agility, and clearer capital allocation,” allowing each arm to accelerate innovation and respond to changing market dynamics more effectively. For shareholders, the demerger offers the prospect of exposure to two focused businesses and sharper value discovery.
Cyberattack Fallout
Adding to investor caution is the lingering impact of a cyberattack on JLR, Tata Motors’ UK-based luxury vehicle subsidiary, which forced a halt in production from early September. JLR began a phased restart of manufacturing operations on October 8, but analysts expect the disruption to weigh on near-term financial performance.
Moody’s Ratings maintained Tata Motors’ Ba1 corporate family rating but revised the outlook to negative, citing significant operational disruptions at JLR. “The affirmation of TML’s Ba1 rating reflects our view that it will likely be able to withstand the impact of the cyber incident,” said Sweta Patodia, Assistant Vice President and Analyst at Moody’s. “However, a full recovery in credit metrics will likely take several months.”
In an analyst meeting, JLR confirmed the attack was not covered by insurance, resulting in a complete production shutdown for nearly a month. While sufficient inventory cushioned retail deliveries, production stoppages caused wholesale volumes to drop 24.2% year-on-year to 66,165 units in Q2 FY26, while retail sales fell 17.1% to 85,495 units. Management has acknowledged that the cyber incident will also impact liquidity, though the extent remains uncertain.
JLR attributed the sales decline to a combination of factors including the cyberattack, the planned phase-out of older Jaguar models, and increased U.S. tariffs on exports. Despite near-term pressures, demand remains resilient in key markets, with the U.S. showing robust momentum with tariff uncertainty resolved and China remaining stable, albeit with some margin pressure from a lower luxury tax threshold.
GST Reforms
Meanwhile, the GST reforms announced recently have had a mixed impact on Tata Motors’ commercial vehicle segment. Many B2B operators in the heavy and intermediate commercial vehicle categories claim input tax credit, limiting the direct benefit from rate cuts. However, the low-tonnage segment, where only 18% of customers claim ITC, stands to gain the most.
In September, the company sold 35,862 units, registering a growth of 19% on year. It reiterated its guidance for the CV business, projecting flat or marginally negative growth in the first half of FY26 and double-digit growth in the second half as the GST impact plays out. For the full fiscal year, CV growth is expected to be in mid-single digits.
Tata Motors is also banking on the IVECO acquisition, which it says could deliver cost synergies surpassing those from the JLR acquisition. Around 40% of R&D and product development costs overlap, and the collaboration opens doors to new segments such as deep mining trucks in India and strengthens presence in Latin America. In the >6-tonne segment, the combined entity is poised to become the world’s fourth-largest player, with the transaction expected to be EPS accretive from day one.
On the passenger vehicle side, demand remained buoyant in September, with wholesale volume by 47% on year at 60,907 units, supported by GST cuts and festive season demand. Over the next 12 months, the company has lined up seven launches comprising four ICE models (notably the Sierra petrol) and three EVs (Punch EV, Tiago EV, and Sierra EV). During an analyst meeting, the management also indicated that a hybrid offering could be introduced if market demand arises.
Brokerages Stay Cautious
Analysts broadly remain constructive on Tata Motors’ long-term prospects but expect elevated volatility in the near term as the market digests the implications of the demerger and JLR’s recovery timeline.
According to JM Financial, Tata Motors is entering a crucial phase where the demerger could unlock significant shareholder value, but the interim period may see price swings due to PV-only valuation. The JLR disruption adds another layer of uncertainty, and clarity on production ramp-up will be key for investor sentiment.
Moody’s echoed similar caution, noting that while Tata Motors’ fundamentals remain intact, “a full recovery in credit metrics will likely take several months” as JLR stabilises operations and resumes normal production levels.