Tata Motors investors have seen a lot of action this week. Following the major demerger that split the company into two separate listed entities—Tata Motors Commercial Vehicles (TMCV) and Tata Motors Passenger Vehicles (TMPV)—the market is now reacting to the latest Q3 FY26 financial results.

If you are tracking the share price on February 1, 2026, you might notice volatility. This is not just because of company performance, but also due to the Union Budget 2026 announcements and a hike in the Securities Transaction Tax (STT) that has impacted the broader Indian market. This article breaks down exactly why the profit numbers look down, what is happening with the share price, and what experts are saying about the future.

Q3 FY26 Results: The Real Reason Behind the Profit Drop

On January 29, 2026, Tata Motors Commercial Vehicles (TMCV) released its earnings for the quarter ending December 2025. The headline number showed a sharp 48% drop in consolidated net profit, falling to ₹705 crore compared to ₹1,355 crore in the same period last year.

At first glance, this looks worrying, but the details tell a different story. The drop in profit is largely due to “exceptional items”—one-time costs that do not reflect the company’s daily business health. Specifically, the company had to pay significant amounts for demerger-related stamp duties and adjustments for new labor codes. These one-time expenses totaled nearly ₹1,600 crore.

Read more: Toyota Innova Crysta 2026

Revenue is Actually Growing

Despite the drop in net profit, the actual business performance was strong. The revenue from operations rose by roughly 16% year-on-year to ₹21,847 crore. This growth was driven by a strong festive season and higher demand for commercial vehicles (trucks and buses), aided by the government’s infrastructure push.

The Demerger Impact: TMCV vs. TMPV

It is important for new investors to remember that “Tata Motors” as a single stock has changed. The business has successfully split into two focused companies:

1. Tata Motors Commercial Vehicles (TMCV): Focuses on trucks, buses, and infrastructure logistics.
2. Tata Motors Passenger Vehicles (TMPV): Focuses on cars, SUVs (like Nexon, Punch, Curvv), and the Jaguar Land Rover (JLR) luxury segment.

The commercial vehicle segment is currently benefiting from the “GST 2.0” reforms and increased government spending on roads and construction. However, the passenger vehicle segment (TMPV) is facing some pressure due to global slowdowns affecting Jaguar Land Rover (JLR) sales, which traditionally contribute a huge chunk of the revenue.

Budget 2026 and Market Reaction

On February 1, 2026 (Budget Day), the entire Indian stock market faced pressure. The Finance Minister announced a hike in the Securities Transaction Tax (STT), which dented investor sentiment.

As a result, Tata Motors shares (both commercial and passenger entities) saw fluctuations. While the long-term story remains positive due to infrastructure growth, the immediate reaction has been cautious. Investors are digesting both the tax hikes and the “exceptional” loss numbers from the quarterly report.

Future Outlook: What Lies Ahead?

Market experts remain generally positive about the Commercial Vehicle (CV) segment. With the government continuing its heavy investment in infrastructure in 2026, demand for trucks and tippers is expected to rise. The company’s management has stated they expect demand to strengthen further in the current quarter (Q4 FY26).

For the Passenger Vehicle (PV) segment, the focus will remain on the Electric Vehicle (EV) market share and JLR’s recovery in global markets. The upcoming months will be critical to see if consumer demand for cars picks up post-budget.

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