The demerger of Tata Motors caused the company's stock to fall by nearly 40 percent on the trading day of October 14. However, investors should not panic about this decline.

Tata Motors Demerger: Tata Motors' shares fell nearly 40 percent on Tuesday, October 14, due to its demerger. However, investors should not be alarmed by this decline. Tata Motors has separated its passenger vehicle and commercial vehicle divisions into separate companies.

Tata Motors Commercial Vehicles will now be known as Tata Motors Passenger Vehicles Limited. The company's shares have been divided in a 1:1 ratio. Any decline in the stock price will be adjusted accordingly.

Why was the company demerged?

The Tata Motors board decided to demerge the company in August last year. The board believed that separating the businesses would allow for greater focus on both companies, better utilization of existing investments, and facilitate future planning.

The company also wants to focus more on new growth opportunities in the future. Both segments are distinct from each other. Therefore, the board announced the demerger of the company. From now on, Tata Motors' passenger vehicle division will be known as Tata Motors Passenger Vehicles, and the commercial vehicle division will be known as Tata Motors Passenger Vehicles Limited. 

Company share status

The company had set October 14th as the demerger date. Today, Tata Motors Passenger Vehicles Limited shares opened at ₹399 on the BSE. The company's shares were listed on the NSE at ₹400. Following the listing, the company's shares fell 2 percent and were trading at ₹391. At market close on Tuesday, the BSE saw a decline of ₹3.90, or 0.98 percent, to close at ₹395.10.