Tata Group stocks dip as Tata Sons IPO outlook dims; Tata Chemicals sees 10% drop
Last week's excitement surrounding the potential IPO of Tata Sons boosted sentiment among retail investors. Consequently, stocks of Tata Motors, Tata Chemicals, Tata Power, and Indian Hotels, all having ownership stakes in Tata Sons, experienced substantial rallies.
Tata Group stocks experienced declines during Monday's intraday trade, reportedly due to indications that Tata Sons is unlikely to enter the primary market in the near future. Shares of Tata Chemicals tumbled by 10%, while those of Tata Investment Corporation, Tata Consumer Products, Tata Power, Indian Hotels, and Tata Motors, were down between 1% and 5%.
Last week's excitement surrounding the potential IPO of Tata Sons boosted sentiment among retail investors. Consequently, stocks of Tata Motors, Tata Chemicals, Tata Power, and Indian Hotels, all having ownership stakes in Tata Sons, experienced substantial rallies, with returns ranging from 10% to 40%.
Tata Sons is reportedly considering restructuring its balance sheet. This could involve actions like repaying debt or transferring holdings in Tata Capital to another entity. By pursuing such steps, Tata Sons might be able to deregister as a core investment company (CIC) and upper-layer NBFC, potentially avoiding listing requirements, as reported by The Economic Times.
Last week, Mumbai-based investment banking firm Spark Capital PWM projected that Tata Sons could be valued at ₹11 lakh crore, with an expected IPO size of around ₹55,000 crore. The firm highlighted Tata Chemicals as the primary means to tap into the potential value unlocking of Tata Sons' stake, as Tata Sons potentially holds around 80% of the company's market capitalisation.
"Given the commodity nature of soda ash and the potential headwinds faced by the industry due to falling realisations, the valuations have been suppressed. We also note that should the street assign a ₹10–11 lakh crore valuation to Tata Sons, the intrinsic valuation of the listed Tata Chemicals business is ~5-7x FY25 PE, which could potentially re-rate should the investment be liquidated at/or post-IPO," said Spark Capital.
In a noteworthy move, Tata Motors on March 04 approved a strategic plan to demerge its commercial and passenger vehicle divisions into two separate listed entities. This decision is aimed at bolstering the company's capacity to seize growth prospects more efficiently.
Simultaneously, Tata Group stocks have been experiencing a bullish trend over the past year, driving the conglomerate's total market capitalisation to a pinnacle of ₹30 lakh crore. This surge was primarily propelled by impressive gains in the shares of Tata Consultancy Services, Tata Motors, Tata Power, and Indian Hotels.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
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