 "Tata Sons chairman calls for aggressive growth despite market challenges")
Tata Sons Chairman N Chandrasekaran has reportedly asked the CEOs of group companies to prioritise aggressive growth despite increasing uncertainties in domestic and global markets. During strategy discussions and business reviews, Chandrasekaran emphasised ambitious goals, asserting that growth opportunities must be seized promptly, even if margins are adjusted later, according to a report by The Economic Times.
Ambitious revenue targets have been set, supported by capital allocation plans, the report said citing executives.
This call for aggressive growth comes as several Tata Group companies, including Tata Consultancy Services (TCS), Tata Motors, Tata Steel, and Tata Power, recorded single-digit revenue growth in the first half of FY25, with profits also slowing for a similar number of firms.
Underperformance of Tata Group stocks
Following strong performance over the past three years, Tata Group stocks have underperformed the benchmark indices in the current fiscal year. The group’s market capitalisation rose by just 5 per cent, compared to an 8 per cent gain in the Nifty. Notable declines of 7 per cent to 20 per cent were observed in key stocks, including Tata Motors, Titan, and Tata Communications, driven by weaker-than-expected results from larger companies.
In the six months ending September, the group’s listed companies reported a 4 per cent year-on-year revenue growth, while overall profit increased 37 per cent to Rs 43,171 crore. However, sequentially, both revenue and profit dropped by 2 per cent and 23 per cent, respectively. Profit margins narrowed to 7.7 per cent in this period, down from 9.78 per cent in the preceding six months, though they improved from 5.68 per cent in the same period of FY24.
Tata Motors reported a modest 1 per cent revenue growth, which was primarily affected by a decline in the performance of Jaguar Land Rover and weaker results in the domestic commercial vehicle segment. Tata Consultancy Services (TCS) achieved 6 per cent growth in both revenue and profit year-on-year, but faced challenges in key sectors such as life sciences, healthcare, and technology. The company noted that clients are increasingly focused on cost-efficiency, leading to reduced spending on discretionary projects.
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Meanwhile, Titan saw a 15 per cent decline in net profit, largely due to the reduction in customs duties and a slowdown in demand for high-value jewellery. Tata Chemicals, on the other hand, experienced a significant drop in profit, falling to Rs 457 crore from Rs 1,082 crore in the previous year.
Tata’s focus on electronics, aviation
The group is heavily investing in emerging ventures such as Tata Electronics, Air India, and Tata Digital, which are expected to scale up significantly over the next three years. These businesses are projected to rank among the group’s top 10 contributors within this period. In addition to battery manufacturing, investments in 2024 have prioritised these three units, contributing to a total committed capital expenditure estimated to exceed $120 billion over five years.