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Key Tata Group stocks rallied on Tuesday, taking the total market capitalisation of all the listed entities past the Rs 31 trillion mark. This surge in optimism stems from the belief that the listing of Tata Sons will unlock value and lead to the simplification of the complicated group holding structure.
Automobile Corporation of Goa (ACGL) gained the most at 14 per cent, followed by Tata Chemicals and Tata Investment Corporation (TICL) at around 5 per cent each.
ACGL and TICL don’t directly hold stakes in Tata Sons. However, ACGL is promoted by Tata Motors, which holds about a 3 per cent stake in Tata Sons.
TICL is the group’s holding company (holdco), holding shares in several group companies. Additionally, Tata Sons directly holds a 68.5 per cent stake in TICL. Shares of TICL have more than doubled this year amid growing buzz about Tata Sons’ listing.
A report by Spark PWM (formerly Spark Family Office and Investment Advisors) suggests that Tata Sons could command a market value between Rs 7 trillion and Rs 8 trillion. Its listing is expected to lead to the rerating of the group’s stocks.
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“The Reserve Bank of India classified Tata Sons as an upper-layer non-banking financial company last year, making it mandatory for the company to list itself on the exchanges by September 2025. We believe that this event could likely lead to the simplification of the complicated group holding structure of Tata Group and enable some of the listed holdcos to liquidate their holding within the giant parent conglomerate. We believe that about 80 per cent of Tata Sons’ holdings might not be monetisable, but the process of restructuring could trigger a rerating,” said Vidit Shah, an analyst at Spark PWM, in a note.
Tata Motors, Tata Chemicals, Tata Power, and Indian Hotels Company hold between 1 per cent and 3 per cent stake in Tata Sons. Assuming a market value of Rs 7 trillion for Tata Sons, Tata Chemicals’ 3 per cent stake in Tata Sons is worth Rs 21,000 crore — nearly 80 per cent of its current mcap.
“The only realistic way to get exposure to the potential value unlocking (of Tata Sons stake) is via Tata Chemicals,” said the Spark note.
According to the wealth manager, the market value of Tata Sons’ listed investments is about Rs 16 trillion, with nearly 60 per cent of the value derived from its 72 per cent holding in Tata Consultancy Services. The value of holdings of the salt-to-software conglomerate in unlisted companies is pegged at Rs 1.6 trillion “given the group’s foray into semiconductors and EV batteries”, added the note.
Spark PWM has arrived at about Rs 7.8 trillion market value for Tata Sons after factoring in a 60 per cent holdco discount. The holdcos belonging to Godrej Industries and Bajaj Group also trade at a similar discount.
