Tata Motors Demerger Update
Effective Date: October 14, 2025
Tata Motors is splitting its Commercial Vehicles business into a separate company.
What's Happening?
Demerger Ratio: 1:1
For every 1 share of Tata Motors you own:
- You'll keep 1 share of Tata Motors
- You'll get 1 new share of TML Commercial Vehicles Limited (free)
The current share price will be split between both companies at a ratio decided by the company.
💼 Tata Motors Effect in Portfolio
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Portfolio will show two holdings: Tata Motors Ltd and TML Commercial Vehicles Limited (TMLCV)
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You will receive TMLCV shares in a 1:1 ratio for every Tata Motors share held
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TMLCV will be shown at ₹0 temporarily until the official price split is announced
There is no change in the average cost of Tata Motors shares for now. The price split will be done once Tata Motors officially announces the allocation ratio (price split) for TMLCV vs Tata Motors. The original cost of acquisition will be allocated between the new and existing shares based on the official confirmation from the company.
During this period, your Unrealized P&L may appear lower, but total investment value does not change and will adjust automatically after the official price allocation.
TMLCV shares are not tradable yet, so the Sellable Quantity will be 0 until listing by the exchanges (expected end of November or early December 2025). You can continue to buy or sell Tata Motors normally, and your Realized P&L will adjust correctly after the price allocation.
Key Points
- Temporary Unrealized P&L dip is normal
- Tata Motors average price unchanged initially
- TMLCV shown at ₹0 and not sellable yet
- No action required from your side
Example – Portfolio View Impact
| Stage | Tata Motors | TMLCV | Impact |
|---|---|---|---|
Before demerger | 100 shares @ ₹800 | – | Normal |
After demerger (temporary) | 100 shares @ ₹800 | 100 shares @ ₹0 (Sellable Qty = 0) | Unrealized P&L may dip |
After price allocation (example 60:40 split) | 100 shares @ ₹480 | 100 shares @ ₹320 | Total investment value restored |
Impact on Margin Trading (MTF/Pay Later)
If you bought Tata Motors using MTF, here's what changes:
What happens to your position?
- Tata Motors - Remains in MTF at original ₹800 average price
- TML Commercial Vehicles - Will be credited as Cash (not MTF) usually within 45 days
Selling after demerger
Your realized P&L will be calculated using the adjusted price (₹480 in the 60:40 example), not your original ₹800 price.
Your ledger posting of profit and loss will happen considering your original ₹800 price. Example:
- Original buy price: ₹800
- Adjusted buy price after demerger: ₹480
- You sell at: ₹500
- Realized profit: ₹20 per share (not ₹300 loss)
- Ledger Posting – Loss of ₹300 (charged to your Trading account balance)
Important: Manage Your Margins
In the above example:
- The difference of ₹300 will be debited from your trading account
- If funds are insufficient in your Trading Account, you must deposit by T+5 day
- Otherwise, holdings may be sold to recover the amount
Action Required:
- Keep sufficient margin/funds in your account
- Monitor your MTF positions regularly
Impact on Futures & Options
Early Expiry Alert
All Tata Motors F&O contracts expiring on Oct 28, Nov 25, and Dec 30, 2025 will now expire early on October 13, 2025
- Last trading day: October 13, 2025
- Settlement date: October 14, 2025
- New contracts start: October 14, 2025
What This Means
If you hold positions on October 13 close:
- Physical settlement will occur
- 100% margin will be charged on all open F&O positions until expiry
- You'll need funds (for buy positions) or shares (for sell positions)
After settlement:
- You'll receive Tata Motors shares on October 14
- TML Commercial Vehicles shares usually within 45 days (1:1 ratio)
Example: Futures Position
| Your Position | 1 lot Buy (800 shares) of TATAMOTORS OCT 28 FUT |
|---|---|
New expiry | October 13, 2025 |
Settlement price | ₹700 (example) |
Amount needed | ₹5,60,000 (800 × ₹700) |
What you get | 800 Tata Motors shares on October 14, 2025 + 800 TML CV shares usually within 45 days |
Example: Options Position
| Your Position | 1 lot Buy (800 shares) TATAMOTORS NOV 1000 CE |
|---|---|
New expiry | October 13, 2025 |
If In-The-Money | Physical settlement - receive 800 shares |
If Out-of-The-Money | Expires worthless |
What you get (if ITM) | 800 Tata Motors shares on October 14, 2025 + 800 TML CV shares usually within 45 days |