Tata Group faces market fluctuations| Plans to avoid tata son’s IPO

Tata Group market fluctuations

In Monday’s volatile intraday trade, Tata Group stocks faced a downturn, largely attributed to growing indications that Tata Sons, the holding company of the conglomerate, may not venture into the primary market in the near future. The market reacted strongly to this news, with shares of key companies such as Tata Chemicals witnessing a substantial 10% tumble. Other affiliated entities, including Tata Investment Corporation, Tata Consumer Products, Tata Power, Indian Hotels, and Tata Motors, also experienced declines ranging from 1% to 5%.

The recent excitement surrounding the potential initial public offering (IPO) of Tata Sons had initially spurred optimism among retail investors. Last week’s surge in stock prices for Tata Motors, Tata Chemicals, Tata Power, and Indian Hotels, all having ownership stakes in Tata Sons, saw returns ranging from 10% to an impressive 40%.

Reports suggest that Tata Sons is actively contemplating a restructuring of its balance sheet. Potential measures include debt repayment and the transfer of holdings in Tata Capital to another entity. By pursuing such strategic steps, Tata Sons aims to deregister as a core investment company (CIC) and upper-layer non-banking financial company (NBFC), potentially sidestepping stringent listing requirements, according to sources cited by The Economic Times.

Spark Capital PWM, a Mumbai-based investment banking firm, projected an estimated valuation of ₹11 lakh crore for Tata Sons, with an anticipated IPO size of around ₹55,000 crore. The firm emphasized Tata Chemicals as a key avenue for unlocking the potential value of Tata Sons’ stake, estimating that Tata Sons may hold around 80% of the company’s market capitalization.

In light of the commodity nature of soda ash and potential industry headwinds due to falling realizations, valuations of Tata Chemicals have faced suppression. Spark Capital noted that assigning a ₹10–11 lakh crore valuation to Tata Sons could lead to a re-rating of Tata Chemicals, with an intrinsic valuation of the listed business potentially reaching 5-7x FY25 PE post-IPO.

In a significant development, Tata Motors approved a strategic plan on March 04 to demerge its commercial and passenger vehicle divisions into two separate listed entities. This move aims to enhance the company’s capacity to capitalize on growth prospects more efficiently.

Despite recent fluctuations, Tata Group stocks have been on a bullish trajectory over the past year, propelling the conglomerate’s total market capitalization to a staggering ₹30 lakh crore. This surge has been primarily fueled by impressive gains in shares of Tata Consultancy Services, Tata Motors, Tata Power, and Indian Hotels.

As the market closely watches Tata Sons’ next move and potential IPO details, the conglomerate navigates the delicate balance between shareholder expectations, strategic restructuring, and the broader economic landscape. Investors and industry observers alike remain on the lookout for further developments that could shape the future trajectory of one of India’s most prominent business groups.

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