Tata Group stocks have suffered significant value erosion since the removal Cyrus Mistry as Tata Sons chairman and the subsequent atmosphere of confrontation surrounding the group. Now that a replacement for Mistry was found in N Chandrasekaran, the uncertainty that loomed over the group is likely to recede and this should reflect in the stock prices of listed group companies.
After October 24, 2016, the day Mistry was removed, the market capitalisation (M-cap) of the 27 listed Tata Group companies have fallen to Rs Rs 8,28845.90 crore, as on January 12, from Rs 8,71,273.30 crore, according to data provided by corporate data firm Capitaline.
While internal battle led to a fall in the stock prices of Tata Group companies, the November 8 demonetisation has proved a double whammy for some of the group companies. The worst hit were Titan Company, Tata Motors and Tata Steel as consumers’ purchase plans were postponed in the wake of the cash crunch and only essential purchases were made during the wedding season.
As on January 12, the worst hit in terms of share price decline since October 24 were Tata Motors-DVR (-10.39 per cent), Tata Chemicals (-10.80 per cent), Tayo Rolls (-10.81 per cent), Nelco (-11.85 per cent), Rallis India (-12.07 per cent), Voltas (-13.62 per cent), Tata Coffee (-14.17 per cent), Tata Metaliks (-17.24 per cent), Oriental Hotels (-17.27 per cent), Tata Global Beverages (-18.62 per cent), Tata Teleservices (Maharashtra) (-19.33 per cent), Indian Hotels (-22.24 per cent) and TRF (-19.33 per cent).
Deven Choksey, managing director, K R Choksey Shares and Securities said, “Except for euphoric conditions, I do not think any thing has changed fundamentally, the euphoria may add to some gains in these stocks.” Chandrasekaran, after appointment as Tata Sons chairman, made a market-neutral statement though but it may instil some confidence among the shareholders rattled by corporate governance related details that came out in the open after Mistry was removed.
Chandrasekaran who has served Tata Group for 30 years, said,“At the Tata group, we are at an inflection point. I am aware that this role comes with huge responsibilities. It will be my endeavour to help progress the group with the ethos, ethics and values that the Tata group has been built on.”
Few companies managed to give positive return during the interim period, mainly it came from Tata Steel and Tata Elxsi by around five per cent and the rest all gave flat to negative returns.
The new Tata Group chief has a challenging job in hand as the combined market value of all listed Tata Group companies almost doubled during the reign of Cyrus Mistry.
Tata Group’s market capitalisation reached over $125 billion (close to Rs 8.5 lakh crore), with the software giant TCS alone commanding a market value of nearly Rs 4.8 lakh crore.
Some of the companies that have showed huge growth in market value during Mistry’s four-year tenure were Tata Metaliks (572 per cent), Tata Elxsi (473 per cent), Voltas (268 per cent), Tata Motors DVR (223 per cent) and Tata Communications (174 per cent).
Challenges before the Tata Group and key companies are many, as their combined debt is in excess of Rs 2 lakh crore, mainly due to Tata Steel’s Corus acquisition, Tata Motor’s JLR buy, as well as debt of other group companies like Tata Power and Tata Teleservices (Maharashtra).
While TCS is the main profit making company for the group, its revenue and profits have started showing stagnation in the recent quarters, thus the other group companies have to do well to offset the negative sentiments of the IT sector which TCS faces right now.
Mutual funds have been buying stocks of Tata group companies during their dips, seeing future value in them. In November, fund houses added substantial positions in key Tata Group companies, an analysis done by Morningstar said. Domestic mutual fund’s holdings went up, between September 30 and November 30, in TCS by 2.45 per cent, in Tata Motors by 11.33 per cent, in Tata Motors DVRs by 3.29 per cent, in Tata Power by 8.36 per cent and in Tata Steel by 8.17 per cent.
“Mutual Funds continued to buy into Tata Motors, with fresh allocation of 1.38 crore shares,” Morningstar said.
raviranjan@mydigitalfc.com
After October 24, 2016, the day Mistry was removed, the market capitalisation (M-cap) of the 27 listed Tata Group companies have fallen to Rs Rs 8,28845.90 crore, as on January 12, from Rs 8,71,273.30 crore, according to data provided by corporate data firm Capitaline.
While internal battle led to a fall in the stock prices of Tata Group companies, the November 8 demonetisation has proved a double whammy for some of the group companies. The worst hit were Titan Company, Tata Motors and Tata Steel as consumers’ purchase plans were postponed in the wake of the cash crunch and only essential purchases were made during the wedding season.
As on January 12, the worst hit in terms of share price decline since October 24 were Tata Motors-DVR (-10.39 per cent), Tata Chemicals (-10.80 per cent), Tayo Rolls (-10.81 per cent), Nelco (-11.85 per cent), Rallis India (-12.07 per cent), Voltas (-13.62 per cent), Tata Coffee (-14.17 per cent), Tata Metaliks (-17.24 per cent), Oriental Hotels (-17.27 per cent), Tata Global Beverages (-18.62 per cent), Tata Teleservices (Maharashtra) (-19.33 per cent), Indian Hotels (-22.24 per cent) and TRF (-19.33 per cent).
Deven Choksey, managing director, K R Choksey Shares and Securities said, “Except for euphoric conditions, I do not think any thing has changed fundamentally, the euphoria may add to some gains in these stocks.” Chandrasekaran, after appointment as Tata Sons chairman, made a market-neutral statement though but it may instil some confidence among the shareholders rattled by corporate governance related details that came out in the open after Mistry was removed.
Chandrasekaran who has served Tata Group for 30 years, said,“At the Tata group, we are at an inflection point. I am aware that this role comes with huge responsibilities. It will be my endeavour to help progress the group with the ethos, ethics and values that the Tata group has been built on.”
Few companies managed to give positive return during the interim period, mainly it came from Tata Steel and Tata Elxsi by around five per cent and the rest all gave flat to negative returns.
The new Tata Group chief has a challenging job in hand as the combined market value of all listed Tata Group companies almost doubled during the reign of Cyrus Mistry.
Tata Group’s market capitalisation reached over $125 billion (close to Rs 8.5 lakh crore), with the software giant TCS alone commanding a market value of nearly Rs 4.8 lakh crore.
Some of the companies that have showed huge growth in market value during Mistry’s four-year tenure were Tata Metaliks (572 per cent), Tata Elxsi (473 per cent), Voltas (268 per cent), Tata Motors DVR (223 per cent) and Tata Communications (174 per cent).
Challenges before the Tata Group and key companies are many, as their combined debt is in excess of Rs 2 lakh crore, mainly due to Tata Steel’s Corus acquisition, Tata Motor’s JLR buy, as well as debt of other group companies like Tata Power and Tata Teleservices (Maharashtra).
While TCS is the main profit making company for the group, its revenue and profits have started showing stagnation in the recent quarters, thus the other group companies have to do well to offset the negative sentiments of the IT sector which TCS faces right now.
Mutual funds have been buying stocks of Tata group companies during their dips, seeing future value in them. In November, fund houses added substantial positions in key Tata Group companies, an analysis done by Morningstar said. Domestic mutual fund’s holdings went up, between September 30 and November 30, in TCS by 2.45 per cent, in Tata Motors by 11.33 per cent, in Tata Motors DVRs by 3.29 per cent, in Tata Power by 8.36 per cent and in Tata Steel by 8.17 per cent.
“Mutual Funds continued to buy into Tata Motors, with fresh allocation of 1.38 crore shares,” Morningstar said.
raviranjan@mydigitalfc.com
