Updated March 11th, 2024 at 12:07 IST

Tata Group shares drop amid uncertainty over Tata Sons IPO: Report

Shares of Tata Chemicals, which surged as much as 40 per cent last week, dropped 10 per cent to of Rs 1,189.

Reported by: Business Desk
Tata Group logo | Image:X Photo
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Shares of several Tata Group companies came under heavy selling pressure after reports suggested that  Tata Sons' listing appeared improbable in the near term.

Shares of Tata Chemicals, which surged as much as 40 per cent last week, dropped 10 per cent to of Rs 1,189. Tata Steel fell 2.35 per cent, Tata Motors declined 1.05 per cent, Titan Company dropped 0.2 per cent, Tata Power declined 2.4 per cent, Indian Hotels declined 1.7 per cent, Tata Consumer Products dropped 4 per cent, Tata Communications declined per cent, Voltas fell 1.5 per cent, Tata Investment Corporation declined 5 per cent, Nelco fell 2.88 per cent and Tata Technologies declined 3.39 per cent.

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Recent reports indicate that the conglomerate's long-anticipated listing may be delayed indefinitely, as the parent entity of numerous Tata group firms deliberates on compliance strategies with the Reserve Bank of India (RBI).

Tata Sons, operating as a Core Investment Company (CIC) under RBI regulations, finds itself categorised as an 'upper layer' Non-Banking Financial Company (NBFC). This classification imposes stringent regulatory requirements, including a mandate to debut on the public market within three years of notification.

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In September 2023, the RBI issued a directive to Tata Sons, stipulating its listing on exchanges by September 2025. However, given the current circumstances, the timeline appears increasingly uncertain as the company explores various avenues to meet regulatory obligations.

The market rally commenced last Monday following the release of a report by Spark Capital, highlighting Tata Chemicals as a major prospect in the IPO landscape. According to Vidit Shah of Spark Capital, if the market attributes a valuation of Rs 10-11 lakh crore to Tata Sons, the intrinsic worth of Tata Chemicals, based on a 5-7 times FY25 PE ratio, could witness a potential re-rating upon the liquidation of investments pre or post IPO.

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Brokerage calculations showed that Tata Chemicals' 3 per cent stake in Tata Sons holds a value of approximately Rs 19,850 crore, representing 80 per cent of the company's market value.

 

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Published March 11th, 2024 at 12:03 IST