BENGALURU: Shares of Tata Motors advanced 4% in early trade on Tuesday, a day after the Indian automaker said it will split into two listed companies, separating its commercial vehicle business from its passenger vehicle arm.

After the demerger, one entity will house the passenger and electric vehicles as well as the Jaguar Land Rover businesses, along with related investments.

The other company will focus on commercial vehicles and related investments, the automaker said in an exchange filing on Monday.

India’s Tata Motors plans to demerge business into two separate companies

The demerger may not result in any immediate change in the Street’s valuation approach, analysts at Nomura said, adding that in the medium term, the businesses should still be able to pursue their respective strategies with greater freedom.

Shareholders will have an identical shareholding in both listed companies after the split, Tata Motors said.

The demerger will be presented to the board and is expected to undergo necessary approvals, taking 12-15 months. Shares of Tata Motors have risen 31.7% so far this year, as of last close.