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Tata Motors Ltd is gearing up for its long-awaited demerger. The automaker has set 14 October as the record date, when existing shareholders will receive one share of the newly formed TML Commercial Vehicles (TMLCV) for every Tata Motors share they hold. TMLCV will be listed separately, while the parent company will retain its passenger vehicle (PV) and electric vehicle businesses, including Jaguar Land Rover (JLR), and will be renamed Tata Motors Passenger Vehicles Ltd.

For investors, the key question now is whether the combined market value of the two entities—TMLCV and the passenger vehicle business—will exceed Tata Motors’ current market capitalization, especially considering the dismal performance of JLR.

In the September quarter (Q2FY26), JLR’s wholesale volume declined 24% to 66,165 units, according to the company’s operational update on Tuesday. The decline was widely expected due to the UK plant shutdown following a cyberattack and ongoing tariff-related uncertainty. The company has since restarted production in the UK.

JLR remains crucial to the story—it accounted for 85% of Tata Motors’ total PV sales and 90% of its Ebitda in FY25, with the remaining coming from Indian PV operations. So, it is critical to derive JLR’s implied valuation in the total valuation of Tata Motors.

Assuming that the CV business of Tata Motors is valued similar to that of Ashok Leyland at EV/Ebitda multiple of 15x based on FY26, the CV business of Tata Motors should have market capitalization of ₹1.4 trillion based on Ebitda estimates of Motilal Oswal.

Even if Tata Motors domestic PV business is valued at EV/Ebitda of 15x based on FY26, its valuation comes close to ₹35,000 crore—a conservative estimate, since peers like Maruti Suzuki India and Hyundai Motor India trade closer to 20x. Tata Motors also owns a ₹10,000 crore stake in Tata Technologies, after applying a 20% holding company discount.

If we subtract the combined value of Tata Motors’ CV business, domestic PV business, and its stake in Tata Technologies—a total of ₹1.85 trillion—from the company’s current market capitalization of ₹2.6 trillion, the implied value of JLR comes to roughly ₹75,000 crore. Considering that JLR is expected to report an adjusted Ebitda of ₹25,000 crore in FY26, it is valued at about 3x of Ebitda. FY26 was a difficult year for JLR marked by the cyberattack and trade disruptions.

But once these issues are resolved, JLR is likely to at least match FY25 performance. So, there is a case for upside in JLR valuation even if valuation multiple remains the same, as Ebitda is likely to bottom out in FY26.

Based on the exercise, one can conclude that at the current market price of Tata Motors of ₹688, the Street is not overvaluing either the CV or PV business. In fact, there could be a positive surprise from TMLCV, especially after its acquisition of Iveco, the Dutch commercial vehicle manufacturer headquartered in Italy. Even though the European CV industry is going through a downturn, the deal price has been struck at an attractive EV/Ebit of 5x versus global peers. Ebit is earnings before interest and tax. Commercial vehicle maker Ashok Leyland, notwithstanding higher domestic growth prospects, trades at an EV/Ebit of 17x.

The Iveco acquisition, awaiting closure by April 2026, hasn’t yet been factored into most analyst estimates. Importantly, unlike the JLR deal years ago, Iveco offers strong synergies with Tata’s core CV operations, strengthening the logic behind the demerger and setting up Tata Motors for its next growth phase.

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