Rs 2.7 lakh crore gone! Tata Sons tussle wipes out 10% value of Tata group stocks

The ongoing Tata Sons tussle has eroded nearly Rs 2.7 lakh crore in market capitalisation (mcap) of listed Tata group stocks in less than two months. A total of 26 listed Tata stocks have lost 10 per cent or Rs 2,65,748 crore of their combined mcap to Rs 24,37,166 crore from Rs 27,02,915 crore between August 12 and Wednesday, data compiled from corporate database AceEquity showed.

A total of 23 of 26 Tata shares delivered negative returns, with a dozen recording double-digit declines.

N Chandrasekaran’s decision not to seek reappointment as Tata Sons Chairman on August 12, the RBI’s rejection of Tata Sons’ plea to surrender its registration as an upper-layer non-banking financial company (UL-NBFC), followed by Chandra’s reappointment by the Tata Sons board and Noel Tata-led Tata Trusts’ objection to it, have all weighed on Tata stocks of late.

The Tata Sons board approving going public and later proposing merging Tata Sons with two of its unlisted units in a move aimed at avoiding a listing also weighed on the sentiment.

Tata Elxsi Ltd and Tata Motors Passenger Vehicles Ltd (TMPV) led the fall with 17 per cent decline each since August 12. Voltas Ltd plunged 17 per cent, Tata Technologies Ltd plummeted 15.86 per cent and TRF Ltd falling 13.95 per cent. Automotive Stampings and Assemblies Ltd, the group flagship Tata Consultancy Services Ltd and Trent Ltd fell 12-14 per cent. Tata Teleservices (Maharashtra) Ltd, Titan Company Ltd, Tata Consumer Products Ltd, Tata Capital Ltd and Automobile Corporation of Goa Ltd also fell 10-11 per cent.

Tata Trusts owned 66 per cent stake in Tata Sons Private Limited (TSPL). In total, seven listed Tata group companies held 11.94 per cent stake in Tata Sons.

The Tata Trusts believes that the proposed reorganisation and action plan for compliance would be in the best interests of the Tata Group as well as its stakeholders, in addition to being a regulatory permissible and compliant form of reorganization of a CIC, it said in a press release.

"The Tata Trusts have, accordingly, written to the TSPL Board to consider and approve the proposal, and to take necessary steps, including applying to the RBI for the necessary ‘no-objection certificate’ as required for the proposed merger and reorganisation of TSPL," Tata Trust said.

As per Bloomberg, Tata Chemicals has 2.53 per cent stake in Tata Sons. Tata Investment Corp Ltd  held 0.08 per cent stake. Tata Steel (3.06 per cent), Tata Motors Passenger Vehicles Ltd (3.06 per cent), Tata Power Company Ltd (1.65 per cent), Indian Hotels (1.11 per cent) and TCPL (0.43 per cent) also held stakes in the company. In total, seven listed Tata group companies held 11.94 per cent stake in Tata Sons.

The Tata Sons IPO could affect group support assessment if public shareholders increase scrutiny of capital allocation, S&P Global Ratings said this week.

It said a potential listing of Tata Sons and a leadership transition at the Tata group would have no immediate impact on ratings of group entities. S&P currently rates Tata Steel, Tata Motors, Tata Power, Tata Capital at BBB/Stable.