By Kosaku Narioka

Tata Motors shares rose sharply after the Indian automaker said it would split into two listed entities in a bid to improve agility and pursue a distinct growth strategy at each business.

Shares were recently 5.0% higher at 1,036.30 rupees ($12.50) on Tuesday after rising as much as 7.9% earlier.

Tata Motors said Monday after market close that it planned to split into two listed entities: the commercial-vehicle company, which produces trucks and buses, and the passenger-vehicle company, which includes its electric-vehicle and Jaguar Land Rover businesses.

The Indian automaker said that while there are limited synergies between the commercial- and passenger-vehicle businesses, there are potentially considerable synergies within the passenger-vehicle business, particularly in the areas of EVs, autonomous driving and vehicle software.

"This demerger will help them better capitalize on the opportunities provided by the market by enhancing their focus and agility," Tata Motors Chairman Natarajan Chandrasekaran said.

Over the past few years, the commercial vehicles, passenger vehicles, and Jaguar Land Rover businesses have delivered a strong performance by implementing distinct strategies, Tata Motors said.

Tata Motors said all shareholders would continue to hold the same size stakes in both listed entities following the planned split.

The company said the board would consider a detailed split plan in the coming months, with implementation subject to shareholder, creditor and regulatory approvals that could take an additional 12 to 15 months.

Write to Kosaku Narioka at

(END) Dow Jones Newswires

03-05-24 0053ET