Explained: Why Tata Motors changed its name to Tata Motors Passenger Vehicles (TMPV)

If you noticed a new name on your Tata Motors shares today, you’re not alone. The company is now officially called Tata Motors Passenger Vehicles Ltd (TMPV). The change marks the latest step in Tata Motors’ plan to split its passenger and commercial vehicle businesses into two separate companies.

What exactly has changed and why?

The demerger came into effect on October 14, separating Tata Motors’ passenger car, electric vehicle and Jaguar Land Rover (JLR) businesses from its commercial vehicle business. From now on, the passenger car side of the business will operate under TMPV. As per the approved plan, the CV business will continue under the original Tata Motors.

For shareholders, the split means that anyone who owned Tata Motors shares before October 14 will receive one TMLCV share for every share they owned. These new shares are expected to appear in demat accounts within 30 to 45 days. Once regulatory approvals are cleared, TMLCV will be listed separately on both the NSE and BSE, most likely next month.

After the demerger, the existing listed company was renamed TMPV. This entity will include the passenger car business, JLR and Tata’s investments in the EV segment. The new commercial vehicle company will take over the operations along with subsidiaries such as Tata Daewoo Mobility and TML Smart City Mobility Solutions.

The commercial vehicle sector will also host the proposed €3.8 billion acquisition of Iveco Group NV’s commercial vehicle business, which experts say could triple combined revenues and increase the company’s global exposure to electric and alternative fuel vehicles.

Brokers have welcomed the move as a value-unlocking exercise. SBI Securities expects TMPV to trade between Rs 285 and 384, while TMLCV could be valued between Rs 320 and 470. YES Securities said the demerger allows investors to focus on two very different business cycles, passenger and commercial cycles, each with its own opportunities.

Tata Motors first announced the demerger plan in March 2024, citing objectives such as operational independence, faster decision-making and better capital allocation. The passenger car division will now include domestic cars, electric vehicles and the JLR business – areas identified as the company’s key growth drivers. Meanwhile, the commercial division will continue to focus on trucks, buses and defense mobility solutions.

(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times)