Tata stocks rise on listing hopes, Chandra’s extension

Mumbai: Shares of Tata Group companies with minority stakes in Tata Sons rose on Thursday after the holding company’s board approved a fresh five-year term for N Chandrasekaran as executive chairman and resolved to initiate steps to comply with applicable RBI guidelines, including those related to a potential listing of Tata Sons.

Tata Chemicals closed 6% higher, Tata Investment Corp gained 5.5%, Tata Motors Passenger Vehicles rose 4.5% and Tata Steel gained 3%. Indian Hotels and Tata Power climbed around 2% higher. The board decision, however, has opened a fresh front in the ongoing differences between Tata Sons and Tata Trusts. Tata Trusts said the resolution to reappoint Chandrasekaran was a “legal nullity”, with Tata Trusts Chairman Noel N Tata voting against the resolution at the Tata Sons board meeting. Four directors voted in favour, according to the Trusts.

Tata Trusts is the majority owner of Tata Sons, in which the Shapoorji Pallonji Group also owns a significant minority stake of more than 18%.

The Tata Sons board approved the fresh five-year term after Chandrasekaran had decided in August not to seek another term when his current tenure ends on February 20, 2027.

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The board also resolved to initiate steps to comply with applicable RBI guidelines and seek guidance from the RBI, Tata Trusts and other stakeholders on the applicable compliance requirements. “For Tata Group stocks, the five-year extension provides leadership continuity and reduces near-term succession uncertainty, which could support investor confidence. For the SP Group, the impact is more indirect, as continued Chandra leadership and the Tata Sons listing process could provide greater clarity around its stake,” said Ravi Singh, chief research officer, Master Capital Services.
“However, Tata Trusts’ challenge may create near-term governance uncertainty. In our view, the development is broadly supportive for Tata Group stocks, while SP Group could benefit if the listing process progresses smoothly,” he said.Read more: Retail investors pull Rs 5,674 crore from stocks, invest Rs 12,618 crore into IPOs in July-August

A potential listing of Tata Sons could benefit Tata Chemicals, Tata Steel and Tata Motors Passenger Vehicles most directly, as they own 2.5-3.1% stakes in the holding company. Tata Chemicals’ 2.5% stake is estimated at around ₹25,300 crore, while Tata Steel and Tata Motors Passenger Vehicles each hold 3.1% stakes worth around ₹30,600 crore. Shares of Shapoorji Pallonji Group companies also gained. Gokak Textiles rose 9% and Afcons Infrastructure gained 3.3%, while Forbes & Co and Eureka Forbes closed marginally lower. The SP Group owns an estimated 18.37% of Tata Sons, and a potential listing could provide the debt-laden group a liquid route to monetise its stake.

Tata Sons could be valued at about ₹12.5 lakh crore, according to calculations cited by Deven Choksey, managing director at DRChoksey FinServ. At that valuation, the 11.94% stake held by seven listed Tata Group companies would be worth around ₹1.49 lakh crore. However, the differences between Tata Trusts and Tata Sons could delay some of the group’s future plans, particularly projects involving large capital expenditure and requiring Tata Trusts’ consent, said Vinod Nair, Head of Research, Geojit Investments.

“The continuation of Chandra suggests a relief for both the groups, Tata and SP, with a plan to proceed with the future listing of Tata Sons leading to unlocking of value for the shareholders. However, the boost could be short-lived, especially for the Tata group, if the differences continue to delay the future growth and smooth working of the group in the medium to long term,” Nair said.