Mumbai: Investors have reposed faith in the ability of Tata Sons Ltd chairman N. Chandrasekaran to steer India’s biggest conglomerate to a healthier future in the aftermath of the controversy over the ouster of its former boss Cyrus Mistry. The overall market capitalization of Tata companies has risen by about 21% in the two years since Chandrasekaran took charge as chairman on 21 February 2017.

Tata Consultancy Services Ltd (TCS), the company that Chandrasekaran ran for more than seven years before he was named group chairman, led the growth in market value.

Market capitalization of all 28 listed Tata group companies rose to 10.88 trillion as of 12 February, according to corporate data provider Capitaline. Of the top 19 conglomerates, the market value of six had declined during this period.

TCS alone accounts for more than 70% of the group’s market value. The software services company’s market capitalization rose 39% to 7.69 trillion in the two-year period.

Excluding it, the picture looks less rosy, with the Tata Group’s market capitalization declining 7.35% in the two-year period, underperforming the 19% gain in benchmark Sensex.

Among group companies, the shares of Tata Motors Ltd were the worst performers under Chandrasekaran’s leadership. With a current market cap of 43,728.9 crore, Tata Motors has plunged 59% in the period. The auto maker has been under pressure because of its British luxury unit Jaguar Land Rover (JLR).

Tata Motors posted the biggest quarterly loss in India’s corporate history in the December quarter owing to an impairment charge for JLR, following which its shares plunged as much as 22.4% on 8 February, the auto maker’s biggest single-day drop since February 1993, which led to many brokerages slashing its target price.

Tata Motors reported a consolidated loss of 26,993 crore after its biggest ever write-off of £3.10 billion for JLR. The write-off has been attributed to slowing sales in China and disruptions from a shift towards eco-friendly hybrid and electric vehicles.

JLR’s sales, which have been contracting every month since July, fell 6.4% from a year earlier in the December quarter to 144,600 vehicles. JLR is also facing headwinds such as the growth slowdown in China and uncertainties because of Brexit.

In terms of market capitalization, TCS is the second most valued stock in the country after Mukesh Ambani-led Reliance Industries Ltd (RIL).

“Our optimism on TCS is based on strong growth visibility backed by robust deal bookings and strong deal pipeline, scale and growth leadership in digital with increasing penetration in large accounts, revival in BFSI (banking, financial services and insurance) vertical and better outlook supported by reduction in captive intensity, and efficient capital allocation," HDFC Securities Institutional Equities said in an 11 January note.

RIL, India’s second largest conglomerate, saw its market capitalization rise the most in percentage terms, jumping 81% to 8.1 trillion, mainly on the back of its retail and telecom businesses in the same period. For purposes of this report, conglomerates have been considered as a group of listed companies that have the same promoters and are in different businesses.

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