Most Tata Group stocks, including TCS, Tata Chemicals, and Tata Motors PV, surged up to 20% in morning deals on the BSE on Tuesday, 15 September, after the Reserve Bank of India (RBI) rejected Tata Sons’ submission to remain private.
Shares of Tata Chemicals hit its 20% upper circuit, while those of Tata Investment Corporation surged 15%. Stocks such as TCS, Tata Motors PV, Tata Elxsi, and Tata Technologies jumped up to 5%. Other group stocks, sush as Tata Motors, Tata Steel, and Tata Consumer Products climbed 2% each.
Why are Tata Group stocks rising today?
The jump in Tata Group stocks can be attributed to growing expectations that Tata Sons Pvt. Ltd. will go public, as India’s central bank has directed the holding company of the salt-to-software conglomerate to list its shares on the bourses.
As Mint reported, Tata Sons submitted an application to surrender its registration as an upper-layer non-banking financial services (UL-NBFC) company in March 2024, which the central bank rejected on Friday. In September 2022, the RBI directed the stock market listing of core investment companies, or upper-layer NBFCs, with an asset size of ₹1 trillion within three years.
However, Tata Sons may challenge the RBI’s directive requiring it to go public, as Tata Trusts, which owns 65.9% of Tata Sons, Chair Noel Tata, and most Trustees have maintained that the holding company of India’s largest business group by revenue should remain private.
Devang Bhatt, director of research – private wealth management, Spark Capital, told Mint that from a holding-company perspective, listed Tata companies that own stakes in Tata Sons could see greater price discovery for those investments following a listing, as an otherwise illiquid asset would have an observable market value.
“Tata Chemicals is one such company with an exposure to Tata Sons and could therefore see greater visibility around the value of this investment. However, the ultimate impact on individual listed companies would depend on the valuation at which Tata Sons lists and the materiality of their respective holdings.”
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