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.
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 |
Impact on Your Equity Holdings
Timeline
October 14, 2025 (Demerger Date)
- 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
Usually within 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
Example What you have today:
- 100 shares of Tata Motors at ₹800 average price
After demerger but before credit of Tata Commercial Vehicle shares:
- 100 shares of Tata Motors at ₹800 average price
- Total investment value remains ₹800 per original share
- Temporary dip in Unrealized PNL until new shares are credited
After credit of Tata Commercial Vehicle shares (assuming 60:40 price split):
- 100 shares of Tata Motors at ₹480 average price
- 100 shares of TML Commercial Vehicles at ₹320 average price
- Total investment value remains ₹800 per original share
- Unrealized PNL gets adjusted
Note: Actual price split will be decided by the company
What You Need to Do
✅ For Equity Investors
No action required
- New shares will be credited automatically usually within 45 days
- Your portfolio will update automatically after 45 days
⚠️ For MTF/Pay Later Users
- Ensure sufficient margin/funds in your account
- Monitor your positions for any shortfall
⚠️ For F&O Traders
- Review your positions immediately
- Decide: Square off before Oct 13 OR prepare for physical settlement
- Ensure adequate funds/shares if continuing to expiry