Tata Motors, India's leading carmaker, is making headlines after announcing a major restructuring. The company plans to demerge into two separate listed entities, one focusing on commercial vehicles and the other on passenger vehicles. This news sent the company's stock price skyrocketing, reaching a record high on Tuesday.

Here's what you need to know

• Demerger Details The new structure will separate Tata Motors' lucrative Jaguar Land Rover business into the passenger vehicle arm. This iconic brand, known for its luxury cars, has been a major driver of Tata Motors' recent success.
• Stock Performance The company was already the best performer on the Nifty Auto index last year, and this positive momentum has continued in 2024. The stock has surged 32% this year, significantly outpacing the auto index's 13% rise.
• Analyst View While analysts at Nomura don't expect immediate changes in investor valuation, they believe the demerger will grant both businesses greater freedom to pursue individual growth strategies in the long run.
• Shareholder Impact Existing shareholders will hold identical shares in both new companies after the split, ensuring they benefit from the growth of both entities.
• Demerger Timeline The proposal will be presented to the board in the coming months and is expected to take 12-15 months to complete after receiving necessary approvals.

This strategic move by Tata Motors has created a buzz in the Indian auto industry. The demerger is expected to:

• Increase competition The passenger vehicle arm will directly compete with industry leader Maruti Suzuki, potentially leading to a more dynamic market.
• Expand investor options The potential listing of Hyundai and Mahindra & Mahindra's strong presence will offer investors a wider range of choices in the Indian car market.

With its record-breaking stock price and exciting future prospects, Tata Motors is definitely a company to watch.