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Tata Group stocks, including Tata Investment Corporation and Tata Motors, surged on December 24 amid IPO buzz for Tata Capital.
Tata Group Shares Rise
Tata Group Stocks Surge Amid IPO Buzz for Tata Capital: Several Tata Group stocks, including Tata Investment Corporation, Tata Technologies, and Tata Motors, saw notable gains in the morning trade on the BSE on Tuesday, December 24. This surge follows reports that the group is nearing the launch of an initial public offering (IPO) for its financial services arm, Tata Capital.
Tata Investment Corporation saw a significant rise, climbing as much as 12%, while Tata Technologies gained 4%. Other Tata stocks, such as Tata Chemicals (up 3%), Tata Motors (up 2%), and TCS (up 1%), also experienced gains during the session.
According to a Moneycontrol report, Tata Group is reportedly in discussions with advisors about launching the Tata Capital IPO next year.
“Work has begun on the proposed initial public offer to comply with RBI’s norms for ‘upper layer’ NBFCs. No final decision has been made on the offering size, but it is expected to be a large-scale deal exceeding Rs 15,000 crore,” a source told Moneycontrol.
The group has reportedly enlisted law firm Cyril Amarchand Mangaldas and investment bank Kotak Mahindra Capital as advisors for the IPO.
Tata Chemicals’ rise is also attributed to its approximately 3% stake in Tata Sons, the main holding company of Tata Group and the largest shareholder in Tata Capital. Tata Sons holds a dominant 92.83% stake in Tata Capital, with the remainder held by other Tata companies and trusts.
Analysts have long identified Tata Chemicals as a potential beneficiary if Tata Sons or its subsidiaries go public, given the significant value of its holdings.
Tata Motors also benefited from the surge, aided by its 4.7% stake in Tata Capital. This stake was acquired after the merger of Tata Motors Finance Ltd (TMFL) into Tata Capital earlier this year, consolidating the group’s financial services operations.
In addition, Tata Motors holds around 3% in Tata Sons, positioning the company to benefit from any potential value unlocking at the holding company level.
Tata Investment Corporation was the biggest gainer of the day. The investment company, which holds stakes in various Tata Group entities, has historically reacted positively to announcements regarding group-level financial moves. Investors are anticipating that Tata Capital’s listing will drive up the valuations of Tata Sons and its associated companies.
Tata Group’s actions are in line with RBI guidelines for upper-layer NBFCs, which require them to list within three years of being classified as such. Tata Capital was categorized as an upper-layer NBFC in September 2022. As of March 2024, Tata Capital’s assets under management (AUM) had grown significantly to ₹158,479 crore, up from Rs 119,950 crore the previous year.
Today’s rally follows earlier movements in Tata Chemicals and Tata Investment Corporation stocks, spurred by reports about the potential listing of Tata Sons. Tata Sons, valued at over Rs 11 lakh crore, has a unique ownership structure, with Tata Trusts holding 65.9%, the Shapoorji Pallonji Group owning 18.4%, Tata Group companies holding 12.8%, and the Tata Family owning 2.8%.
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