Tata Sons overtakes govt as largest promoter of listed companies

Tata Sons ended the calendar year as the largest promoter of listed companies in the country, ahead of the central government. 

For the first time in nearly two decades, the government is no longer the largest promoter group on the bourses, thanks to a double-digit decline in the market capitalisation of government owned and promoted companies during the calendar year.

Tata Sons stake in the group’s listed companies is now worth Rs 9.28 trillion, up 34.4 per cent on a year-on-year (YoY) basis. 

In comparison, the Government of India’s stake in listed central public sector undertakings (PSUs) is currently valued at Rs 9.24 trillion, down 19.7 per cent YoY.

The market value of government stake in PSUs was nearly 67 per cent higher than the value of Tata Sons’ stake in its companies at the end of December last year. This was nearly two and half times more at the end of March 2015.

Tata group companies have also overtaken PSUs in terms of market capitalisation. The 15 Tata group companies had a combined market capitalisation of Rs 15.6 trillion on Thursday, up from Rs 11.6 trillion a year ago on December 31, 2019. In comparison, the 60 listed PSUs, where Government of India is a promoter, had a combined market capitalisation of Rs 15.3 trillion on Thursday, down from Rs 18.6 trillion a year ago. 

This is first time in at least two decades that PSUs are not in the largest group on the bourses in terms of market capitalisation and promoter stake.

The analysis is based on the year-end market capitalisation and promoter stake of listed companies that are directly promoted and owned by the Government of India and Tata Sons, respectively.

The sample excludes PSUs such as Hindustan Petroleum, where Oil & Natural Gas Corporation is now the promoter. Other such PSUs not part of the sample include Mangalore Refinery & Petrochemicals, Chennai Petroleum Corporation, Petronet LNG, Indraprastha Gas and REC, among others. The PSU sample also doesn't include companies such as HIndustan Zinc and Tata Communications, which have been privatised but Government of India still owns minority stake.

In the Tata group, the sample excludes listed subsidiaries and associates of other group companies such as Tata Coffee, Tata Metaliks, Tata Steel Long, Rallis India and Tata Steel BSL, which though part of the group, are not owned by Tata Sons directly.

Tata Sons’ outperformance is largely due to stellar show by Tata Consultancy Services and Titan Company – the top two companies in the group in terms of market capitalisation.

TCS is up 33 per cent since end of December 2019 while Titan Company has rallied 32 per cent in the last 12 months.

These two companies now account for 78 per cent of the group’s combined market capitalisation and 87 per cent of the market value of all Tata Sons’ stake in the various group companies.

However, Tata Communications has been the top performer in the group this calendar year with 178 per cent rise in its market capitalisation since the beginning of the year. Other big performers in the group include Tata Consumer (up 168 per cent), Tata Elxsi (up 122 per cent) and Tata Steel (up 36 per cent). Tata Chemicals is the only group company to see a decline in 2020 as its market capitalisation is down 28.4 per cent in the last 12-months.

In comparison, the Government of India suffered due to a sharp decline in the market capitalisation of State Bank of India (SBI) (down 18 per cent YoY), Oil & Natural Gas Corporation (ONGC), NTPC (down 17 per cent) and Coal India (down 36 per cent). 

Other big losers in the PSU space include Bharat Petroleum Corp, GAIL (India), Punjab National Bank and Bank of Baroda. State Trading Corporation was the biggest gainer among PSUs with 72.8 per cent YoY rise in its market capitalisation followed by SAIL (up 72.7 per cent) and Indian Bank (up 57.4 per cent). Their small size, however, restricted their overall impact on the sample.

In all, 36 out of 60 PSUs in the sample saw a decline in their market capitalisation in 2020 while 24 saw a rally in their share price. SBI is now the largest PSU with a market capitalisation of Rs 2.45 trillion followed by ONGC at Rs 1.17 trillion and Power Grid Corporation at Rs 1 trillion. The top five PSUs now account for 42 per cent of the combined market capitalisation of all PSUs and 39 per cent of the market value of government stake in listed PSUs.