Tata Group stocks soar after RBI listing decision

MUMBAI: Tata Group companies' shares jumped on Tuesday after Reserve Bank of India directed Tata Sons to comply with upper-layer NBFC rules - including a mandatory listing. Seven listed Tata companies together hold 11.9% of Tata Sons, and a potential IPO could unlock value for them. Tata Chemicals led the rally, hitting its 20% upper circuit to close at Rs 734.5 on BSE, valuing the company at Rs 18,712 crore.

The math explains the enthusiasm. Tata Chemicals holds a 2.5% stake in Tata Sons - worth more than the soda ash maker's entire market cap, market participants said. At a conservative valuation of Rs 10 lakh crore for Tata Sons, even after a holding-company discount, that stake alone is worth Rs 25,000 crore - 34% above Tata Chemicals' market cap.

Other Tata Sons shareholders rallied too. Tata Motors Passenger Vehicles and Tata Steel, each holding 3.1% of the parent, rose 5% and 0.3% respectively. Tata Investment Corporation, another investment holding company, which owns 0.01% of Tata Sons, jumped 10.3% to close at Rs 718.35.

The rally spread beyond the Tata fold. Shapoorji Pallonji Group - Tata Sons' largest minority shareholder at 18.4% - saw Afcons Infrastructure hit its 20% circuit, touching an intraday high of Rs 304.55 on NSE. Forbes & Co surged 20% to its price band of Rs 331. Gokak Textiles climbed 10% to Rs 64.

A Tata Sons IPO - combining a fresh issue and an offer for sale - could unlock value across the company and its shareholders. The fresh issue would fund Tata Sons' capital-intensive bets in semiconductors, battery storage and aviation, while the offer for sale would let existing shareholders, Tata companies and Shapoorji Pallonji alike, monetise part of their holdings.

For the debt-laden Shapoorji Pallonji Group, an IPO could offer a route to cut its roughly Rs 55,000 crore in borrowings - and relieve liquidity pressure that has dogged it for years.

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