Mistry's death sentimentally negative but stay put in SP Grp stks: Analysts

Cyrus Mistry, a high-profile Indian-born Irish businessman and the former chairman of the Tata group, passed away in a road accident on September 4, 2022

Shares of Shapoorji Pallonji Group companies cracked on the bourses on Monday, a day after the Group's scion Cyrus Mistry's untimely death.

Eureka Forbes shares, where Shapoorji Pallonji And Company Private Limited held nearly 9 per cent stake at the end of the June quarter, fell 1.06 per cent to Rs 489 apiece on the BSE. In comparison, the benchmark BSE Sensex index rose 0.75 per cent.

Those of Sterling and Wilson Renewable Energy, and Forbes and Company, meanwhile, slipped 0.6 per cent and 5 per cent, respectively. Shapoorji Pallonji And Company Private Limited held 25 per cent stake in Sterling and Wilson RE at the end of June, 2022, while Cyrus Pallonji Mistry and Pallon Shapoor Mistry, in their individual capacities, held 0.38 per cent stake each.

As regards Forbes and Company, Shapoorji Pallonji and Company Private Limited held 72.56 per cent stake at the end of June, 2022, shareholding pattern data shows.

Mistry, a high-profile Indian-born Irish businessman and the former chairman of the Tata group, passed away in a road accident on September 4, 2022, in Maharashtra's Palghar district. While analysts see the development as sentimentally negative, they advise investors to stay put in fundamentally strong companies.

"The companies are being run by professionals, but investors need to track who will succeed Mistry. He is survived by his two sons, but we don't know if they are ready to take charge," said Deven Choksey, managing director, KR Choksey Investment Managers.

The succession plan is slightly ambiguous right now, but investors should stay put in these stocks, and avoid taking any impulsive decision, he added.

 

Cyrus Mistry was the first non-Indian citizen to lead the Tata group, and was the sixth and youngest chairman of the Indian business conglomerate. He took over after Ratan Tata retired in December 2012. Mistry is survived by two sons and his wife Rohiqa Chagla.

According to analysts, Mistry was only acting as a promoter in these listed companies, while the day-to-day functioning rested with professionals. Hence, they don't anticipate serious implications of his demise on the companies' future trajectory.

"The move will definitely have an impact as he was seen as someone who steered the Group out of the debt trap. But, historically, such large Groups have second and third lines of command in place. So, we could see a knee-jerk reaction but it should settle down," said Ambareesh Baliga, an independent market analyst. He suggests investors stay put, but avoid buying the dips.

From a slightly long-term perspective, G Chokkalingam, founder and chief investment officer at Equinomics Research, said that it is easy for such large, professionally-managed Groups to attract talent from the market.

"Talent acquisition is a problem of mid- or small-sized companies. However, an evolving institution can always successfully hunt for management. Therefore, investors should hold the stocks based on their fundamentals." he added.

So far this calendar year, shares of Sterling and Wilson Renewable Energy, and Forbes and Company have slipped 21.6 per cent, and 93 per cent, respectively, on the BSE. Those of Eureka Forbes, which got listed on the exchange on March 16 this year, however, were up 4 per cent till date.

In comparison, the BSE500 index climbed 2.6 per cent, and the benchmark BSE Sensex added 1.5 per cent, ACE Equity data shows.