Here's why you should keep an eye on Tata Motors shares on Tuesday, March 5

Shares of Tata Group firm, Tata Motors, will be on investors' radar on Tuesday, March 5, as the Board has decided to split the commercial and passenger vehicle businesses.

The board of Tata Motors Ltd (TML), after market hours on Monday, gave approval to a proposal to demerge the automobile maker into two separate listed companies.

"One entity will house the commercial vehicles (CV) business and its related investments, while the other will encompass the passenger vehicles (PV) businesses, including domestic PV, electric vehicle (EV), Jaguar Land Rover (JLR), and their related investments," Tata Motors said in a statement.

While there are limited synergies between Commercial Vehicles and Passenger Vehicles businesses, there are considerable synergies to be harnessed across PV, EV, and JLR, particularly in the areas of EVs, autonomous vehicles, and vehicle software which the demerger will help secure, TaMo added.

The demerger will be executed through a National Company Law Tribunal (NCLT) scheme of arrangement. 

All TML shareholders will maintain identical shareholding in both the listed entities. The NCLT scheme of arrangement for the demerger will be presented to the TML board of directors for approval in the coming months, and it will be subject to necessary shareholder, creditor, and regulatory approvals, which could take an additional 12-15 months.

On Monday, shares of the automobile major ended at Rs 987 per share. So far in the current calendar year, the stock has already moved up near about 25 per cent on the bourses.

In six months, it has surged over 60 per cent as against the Nifty 50's over 10 per cent gain.

Operationally, Tata Motors reported a 9 per cent increase in its total domestic sales to 84,834 units in February 2024, compared to 78,006 units in the same month a year ago.

Coupled with international business, Tata Motors sales for February 2024 stood at 86,406 vehicles, compared to 79,705 units during February 2023.