Tata group stocks lag the Sensex

One year after Cyrus Mistry’s exit as group chairman, Tata group companies have remained laggards on the bourses. The combined market capitalisation of 26 listed group companies and stocks is up 4.7 per cent in the last 12 months, against 15.8 per cent rise in the benchmark BSE Sensex during the period.

In all, half the group stocks underperformed on the bourses in the past 12-months led by Tata Motors, Tata Tele (Maharashtra) and Indian Hotels. Tata Consultancy Services (TCS), however, which underperformed the Sensex with 6.5 per cent gains, also impacted the group’s market capitalisation increase. (See the adjoining chart)

“The group’s poor performance on the bourses is largely due to the weak show by TCS and Tata Motors, which together account for nearly 70 per cent of the combined market capitalisation of all listed Tata companies. Tata Steel has done well and should have moved the needle but its positive contribution was more than offset by Tata Motors, which is facing headwinds at Jaguar Land Rover,” said G Chokkalingam, founder and managing director Equinomics Research & Advisory.

The group does not have listed real estate and non-banking finance companies (NBFC), which have been market favourites. Both Tata Capital and Tata Realty are unlisted. “The recent rally in the market has been largely led by NBFC, infrastructure and real estate stocks, where the Tatas have no presence on bourses. Also, most of the key group stocks are large-caps but investors currently favour mid- and small-cap stocks,” adds Chokkalingam. 

TCS accounts for 54 per cent of the group’s current combined market cap of Rs 9.1 lakh crore, slightly down from 55 per cent a year ago. Tata Motors is the second most important company, with 15 per cent share in the total market cap, down from 21 per cent a year ago. The stock is down 22 per cent in the past 12 months.

Among individual group stocks, the past 12 months belonged to group companies in the metals, retail and consumer space, while firms in power, hospitality, chemicals and technology continue to face headwinds.  

Tata Steel listed subsidiary Tinplate Company of India was top performer with its shares nearly tripling in the past 12 months. It is followed by another Tata Steel subsidiary, Tata Metaliks, whose stock price is up 70 per cent. Tata Steel itself is up 68 per cent in the past year, in line with the global recovery in steel prices and the company’s resolution of problems in Europe.

Among retailers, Titan topped with 66 per cent gains in the past 12 months. It is followed by Trent — owner of Westside departmental stores — up 55 per cent. Consumer play Tata Global Beverages and air-conditioner maker Voltas are both up 35 per cent each. 

The next few quarters are likely to remain tough for the group. “Nearly three-fourth of the group’s market cap is accounted for by TCS, Tata Motors and Tata Steel. While the Tata Steel stock price has peaked, TCS continues to face demand headwinds and Tata Motors faces demand and pricing pressure in both domestic and overseas division. Other companies are still too small to move the needle, even if they shine,” said Chokkalingam.