TATAMOTORS

Sets Demerger Date Amid Investor Focus on JLR Valuation

has set October 14 as the record date for its upcoming demerger, which will separate its commercial vehicle (CV) business from its passenger vehicle (PV) and electric vehicle (EV) operations. → Existing shareholders will receive one share of the newly formed TML Commercial Vehicles (TMLCV) for every share of the current Tata Motors. The parent company will be renamed Tata Motors Passenger Vehicles Ltd and will retain the PV, EV, and Jaguar Land Rover (JLR) businesses. → Investors are now focused on whether the combined market value of the two demerged entities will exceed Tata Motors' current market capitalization of ₹2.6 trillion. → The valuation of JLR is critical as it accounted for 85% of Tata Motors' total PV sales and 90% of its EBITDA in FY25. JLR's wholesale volume in Q2FY26 declined 24% due to a UK plant shutdown following a cyberattack and tariff uncertainty. → Based on analyst estimates and peer multiples (e.g., Ashok Leyland at 15x EV/EBITDA), the CV business is conservatively valued at approximately ₹1.4 trillion. → The domestic PV business is valued at around ₹35,000 crore (using a conservative 15x EV/EBITDA). → Factoring in a ₹10,000 crore stake in Tata Technologies, the implied valuation of JLR (subtracting the ₹1.85 trillion combined value from the total market cap) stands at roughly ₹75,000 crore. → This implied JLR valuation suggests it trades at only 3x its expected FY26 EBITDA of ₹25,000 crore, indicating a potential upside once temporary issues like the cyberattack are resolved. → The market is not overvaluing the CV or domestic PV businesses at the current share price (₹680), and there is potential for a positive surprise from TMLCV following its attractive acquisition of Dutch CV maker Iveco.