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Photo: Mint
Photo: Mint

Tata group stocks take a hit

Shares of Tata Consultancy Services, Tata Motors, and Tata Steel fell as much 5% in intraday trading

Shares of top Tata group companies fell prey to selling pressure on Wednesday after the Shapoorji Pallonji (SP) Group decided to severe longstanding ties with India’s largest conglomerate.

Shares of Tata Consultancy Services (TCS), Tata Motors, and Tata Steel fell as much 5% in intraday trading. Others such as Indian Hotels Company, Trent and Tata Consumer declined, too, while a few outliers such as Titan Company and Tata Chemicals gained 1-3%.

Meanwhile, shares of SP Group companies Sterling and Wilson Solar Ltd and Forbes and Co. Ltd surged because the move will help cash-strapped SP Group to raise fund to service debts. Shares of Sterling & Wilson Solar hit the day’s maximum permissible trading limit of 20%, its biggest single-day gain since August 2019. Forbes hit the 5% upper circuit.

Analysts said the biggest worry for Tata group firms is finding the right valuation and managing funds to buy the 18.4% stake of the SP Group.

“Expectedly SP Group stocks are doing well while Tata group shares are under pressure. Tatas may have to rope in large foreign investors to buy out the SP stake with a promise to list Tata Sons in future," said Deepak Jasani, head, retail research, HDFC Securities.

However, the exit of the SP Group can be considered a positive for the Tata group as it would end the overhang that the feud had on Tata companies so far, said Arjun Yash Mahajan, head, institutional business, Reliance Securities. “The exit of the SP Group from Tata group, may be taken as positive for Tatas as this overhang of unwarranted interference in day-to-day management will go away," he said.

Experts believe that the exit process might have a bearing on the TCS stock, the most valued group firm, as Tata group may rely on its TCS shareholding to finance the purchase of the Mistry family’s stake.

nasrin.s@livemint.com

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