A day after Cyrus Mistry was announced the successor of Ratan Tata as the chairman of the Tata Group, stocks of major group companies reacted positively. On the one hand, benchmark indices partially recovered the previous day's losses and gained a percentage point; shares of Tata Motors jumped 2.7 per cent while that of Tata Consultancy Services and Tata Global Beverages rose 2.5 per cent and 2.1 per cent, respectively.
However, markets participants chose not to term it a "thumbs up". Though, they said, given the fairly laid down succession plan, in the long-term, the non-Tata chairman should turn out to be successful, given his limited public credentials.
What is the cause of worry?
"Mistry is getting into a position which is a role too big to handle," said the managing director of a foreign fund house. "The succession game plan is good in relation to the time the chairman-designate would get before he takes over," he said.
According to Ambareesh Baliga, chief operating officer, Way2Wealth Securities, "He is an unknown name. No one in the markets knows much about him, which raises a question mark. Markets have not yet given much thought to this announcement.”
Agrees Piyush Garg, chief investment officer at ICICI Securities. "Tata group of companies are professionally well-managed ones. But at this point of time, one should not be enthusiastic or pessimistic," he said.
Some compare the situation when Ratan Tata took over the chairmanship of the group in the early 90s. "That time, too, there was not much know-how about Tata. Whatever knowledge markets had was mostly negative. But he managed to lead the group successfully and brought changes," said the managing director.
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A majority of the market participants, Business Standard spoke to, were enthused by the fact that the new chairman was young and expressed hopes that in the long run he would be successful.
They say the confidence, which Ratan Tata showed, has sent positive signals to market participants and shareholders. Since, Mistry would work in close association with the current chairman before taking over, it should help in knowing the new man's credentials, they said.