Tata Motors Ltd. has approved a proposal to split the company into two separate listed entities for passenger and commercial vehicles as it looks to boost growth and improve accountability.For every share held in Tata Motors, investors will get one share each of the new listed entities, an exchange filing said on Monday. "The demerger will be implemented through an NCLT scheme of arrangement."This move will empower both entities to pursue their respective strategies to deliver higher growth with greater agility while reinforcing accountability, the company said.Passenger vehicles, including British luxury carmaker Jaguar Land Rover, accounted for 79% of the company's Rs 3,41,544 crore revenue in FY23, while commercial vehicles contributed 21%."This demerger will help them better capitalise on the opportunities provided by the market by enhancing their focus and agility," N. Chandrasekaran, chairman of Tata Motors, said in a statement. "This will lead to a superior experience for our customers, better growth prospects for our employees and enhanced value for our shareholders.”The company has delivered a strong performance by implementing distinct strategies for commercial vehicles, passenger vehicles, and Jaguar Land Rover. All these businesses have been operating independently under their respective chief executive officers since 2021, Tata Motors said.The NCLT scheme of arrangement for the demerger will be placed before the company's board for approval in the coming months. The demerger will have no adverse impact on employees, customers, or our business partners, the company said.The demerger is an excellent move and will be leveraged at both operational and financial levels, according to Gurmeet Chadha, Managing Partner and CIO, Complete Circle. "This move will lead to more value creation in different subsidiaries and have the businesses in focus."According to Deven Choksey, MD, KRChoksey Investment, the passenger vehicle business, particularly EVs, is demanding more investment. "This demerger is a value-unlocking proposition... It looks like an extremely promising prospect for the investors."Shares of Tata Motors have more than doubled in the past year, making it NSE Nifty 50 Index's top performer. The stock closed 0.12% lower at Rs 987.20 apiece on the NSE on Monday compared to an almost unchanged benchmark index.Of the 34 analysts tracking the company, 26 recommend a 'buy' rating, five suggest a 'hold' and three have a 'sell' call, according to Bloomberg data. The average of 12-month analyst price targets implies a potential downside of 3.6%.