Tata group stocks may pop after RBI decision on listing
Tata Chemicals, which holds a 2.5% stake in Tata Sons, is slated to outperform in the short term as the stock market anticipates a listing after RBI refusal to stay private.
A short-term pop could push up the stocks of seven Tata Group stocks, led by Tata Chemicals Ltd., which together hold 11.92% stake in Tata Sons Pvt. Ltd., the holding company (holdco) of the salt-to-software conglomerate, after RBI rejected its submission to remain private.
Tata Chemicals is expected to be a standout performer when the markets reopen on Tuesday, as its approximately 2.5% stake in the holdco is valued at upwards of ₹17,407 crore after an estimated 40% holding company discount, were it to be listed. This is against its market capitalisation of ₹15,603 crore as of Friday.
To be sure, Tata Sons receives dividend income from Tata Group companies and proceeds from listed companies. Its standalone revenue totalled ₹42,366.5 crore and it reported ₹31,961 crore profit in FY26. These standalone numbers do not include the burgeoning losses from businesses incubated under the holdco. Tata Sons’s four privately held businesses include Air India Ltd., Tata Digital, Tata Electronics and Tata Agratas, which reported a combined loss of ₹29,924 crore.
When a similar listing prospect emerged in March 2024, group shares surged rapidly before gains fizzled when Tata Sons sought to surrender its registration as a core investment company. Tata Chemicals rallied 39% in less than a week during that wave, while entities like Tata Motors Ltd, Tata Power Co. Ltd., and Tata Steel Ltd. also posted steep short-term advances.
The continuation of the likely momentum if the listing takes place, will depend upon whether Tata Sons accedes to the regulatory directive or mounts a legal challenge.
Tata Sons submitted an application to surrender its registration as an upper-layer non-banking financial services (UL-NBFC) company in March 2024, which the central bank rejected on Friday. In September 2022, RBI had directed the stock market listing of core investment companies or upper-layer NBFCs with an asset size of ₹1 trillion within three years.
Tata Trusts’ reaction could alter trajectory
"From a holding-company perspective, listed Tata companies that own stakes in Tata Sons could see greater price discovery for those investments following a listing, as an otherwise illiquid asset would have an observable market value," said Devang Bhatt, director research - private wealth management, Spark Capital. “Tata Chemicals is one such company with an exposure to Tata Sons and could therefore see greater visibility around the value of this investment. However, the ultimate impact on individual listed companies would depend on the valuation at which Tata Sons lists and the materiality of their respective holdings.”
Veteran investor Shankar Sharma added that there could be a ‘short-term uptick’ in the shares of companies holding stakes in Tata Sons.
"I say short term because we don't know how the trusts having controlling stakes in Tata Sons would react post the RBI decision. If the regulatory diktat were to be legally challenged, that would change the picture," Sharma said
To a query about Tata Sons' likely listing being a catalyst for a Tata Group restructuring, Dhiraj Relli, managing director and chief executive officer of HDFC Securities, said, “The IPO will force the conglomerate to pre-emptively overhaul its complex web of cross-holdings, corporate governance, and asset allocations to protect the group from external vulnerability.”
Back in 2024, Tata Chemicals surged 39% from 1 March to ₹1,349 apiece on 7 March; Tata Investment Corp., which was in the trade-to-trade category and holds a 0.08% stake, surged 28% to ₹9,757 apiece over the same period and ahead of the 1:10 share split in October last year. Trade-to-trade category bars intraday selling, which means delivery is compulsory on the same day.
Tata Power, which holds 1.65%, jumped 15% to ₹433 over the comparative period, and the demerged Tata Motors PV, which holds 3.06% in Tata Sons, jumped 9% from 1 March to ₹ 1,065.60 on 5 March. Other companies, including Tata Steel (3.06% in Tata Sons) and The Indian Hotels Co. Ltd. (1.11% stake), rose 6% and 1.35% each in the first week of March 2024, while Tata Consumer Products Ltd. (0.43%) rose 6% between 1 and 11 March.
About the Authors
Ram Sahgal is a deputy editor at Mint. He has over 20 years of experience in journalism, with previous roles at The Intelligent Investor, Bombay Times, The Economic Times, and The New Indian Express. Between his media roles, he briefly worked at a commodities exchange before returning to his true passion, business journalism. Ram graduated in liberal arts from St Xavier’s College, Mumbai, where he studied films, which explains his move to Bombay Times, where he covered the film industry during the rise of Sunny Deol and Sanjay Dutt. He took a leap of faith to transfer to The Economic Times, and thanks to his restless mind, later moved to cover the commodities beat. Over the past three years, Ram has been tracking the stock markets at Mint. His focus areas include writing about market infrastructure institutions, brokerages, derivatives, and related regulations. His hobbies include spotting trains and understanding the locomotives that power them. In his free time, he takes his octogenarian mother out for drives and goes to the cinema with her on weekends. If he has a dream, it is to write a screenplay for a movie. For now, he enjoys viewing market data on NSE and BSE, observing the shifting mood of Mr Market, and conversing with market experts.
Dipti has spent nearly a decade happily knee-deep in the fast-moving, occasionally nerve-wracking, and always fascinating world of stock markets, tracking everything from sharp sell-offs to surprise rallies, and the narratives that drive them. She began her journalism journey at Informist, sharpened her market instincts at CNBC Digital and Moneycontrol, and is now charting new territory with Mint. Here, she is exploring new ground, bringing together sharp analysis, on-ground insights, and a keen eye for what really moves markets.<br><br>Before stepping into journalism, Dipti studied law and worked with a solicitor firm for close to three years, an experience that gave her a strong foundation in analytical thinking, contracts, and corporate structures. But the pull of markets and storytelling proved stronger, prompting a switch from law to journalism.<br><br>She writes about stocks and investments, but that’s only part of the story. Dipti also teams up with market experts to turn complex trends into sharp, easy-to-understand videos, occasionally peeks at deals and acquisitions, and regularly picks the brains of industry leaders. Somewhere between earnings calls, market swings, and boardroom chatter, she’s always looking for the next story that explains what’s really moving the markets.
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