Titan beats Tata Steel in market valuation

Titan follows TCS and Tata Motors to be among Tata Group's top three most-valued companies

The 31-year-old Titan Company overtook the 108-year-old Tata Steel in market valuation on Thursday. This gives the watch and jewellery maker an entry into the coveted top-three positions at the $104-billion turnover Tata group.

Tata Steel on Thursday lost a 5.1 per cent of its market value to Rs 33,302 crore with its share price dropping to Rs 342.9 a piece on the BSE. This followed by the announcement of Rs 5,674-crore loss in the quarter ended March as it recognised Rs 5,000-crore impairment in the quarter largely for long products division of its UK operations.

Tata Steel has been in trouble since it acquired Anglo-Dutch Corus in 2007 for $12.1 billion (Rs 60,333 crore). The demand for steel in European markets is among the weakest in the world, which has compelled Tata Steel to get into talks with Swiss group Klesch & Co to sell its long products division.

Titan closed Rs 375 a share on the BSE on the day giving it market valuation of Rs 33,367 crore. The margin of gap in valuation with Tata Steel looks small, but Titan has emerged as the most persistent challenger this year. It first overtook Tata Steel on January 28 and continued its lead for about three months.

“This reflects more on the non-realisation of Tata Steel’s potential than the success of Titan,” said Bhaskar Bhat, managing director, Titan.

Titan follows Tata Consultancy Services and Tata Motors, which have market capitalisations of over Rs 5 lakh crore and Rs 1.4 lakh crore, respectively, on Thursday.

Titan introduced the quartz watch technology in India three decades ago. It has also built the jewellery brand, Tanishq, and eyewear brand Titan Eye Plus. The company is known for its innovative products and solutions.

“Titan’s success also reflects the metamorphosis of the group from an industrial powerhouse to one that is doing well in today’s consumer and technology businesses,” said an insider who has seen the group transform. The oldest company in the group, Indian Hotels, established by founder Jamsetji Tata 114 years ago, is the tenth-most valued with a market capitalisation of Rs 8,385 crore.

The hotels company was followed with companies such as Tata Steel, Tata Power and Tata Chemicals that got the group industrial power house. The three companies on the top in the group today are relatively younger and all were established by the visionary JRD Tata. This also reflects how the industry dynamics have changed.

“Also steel is a cyclical business and Tata Steel certainly has a much larger potential to achieve,” said the insider requesting not to be identified.