Tata Group stocks soar on reports of potential IPO
Mumbai: Shares of six Tata Group companies hit life-time highs on Thursday on news reports that Tata Sons, the holding company of the conglomerate, is considering an initial public offering (IPO) to raise ₹55,000 crore.
Among the group companies to hit fresh highs were Tata Steel ( ₹159), Tata Chemicals ( ₹1,349), Tata Power at ( ₹433.30), Tata Investment Corp at ( ₹9,756.85), Tata Consumer at ( ₹1,269.60), and Tata Comm at ( ₹2,038.40).
This positive sentiment followed a strong performance on Thursday, where 10 Tata Group companies closed over 5% higher, pushing the group’s market capitalization up by 3.3% to ₹31.9 trillion from ₹30.89 trillion. In comparison, the Adani and Ambani groups currently have market capitalizations of ₹16.26 trillion and ₹22.13 trillion, respectively.
Analysts believe the potential IPO has fueled investor interest in Tata Group companies, particularly those with significant holdings in Tata Sons. Vidit Shah, an analyst at Spark PWM, estimates that the stake in Tata Sons could be worth 80% of Tata Chemicals’ market capitalization, translating to an estimated value of ₹19,850 crore. Similarly, they estimate the value of Tata Sons’ stake in Tata Power (21%), Tata Motors (16%), and Indian Hotels (19%) to be ₹12,946 crore, ₹24,008 crore, and ₹8,709 crore, respectively.
“We calculate the intrinsic valuation of Tata Chemicals to be 11x FY25 PE (calculated using Bloomberg earnings estimates). Given, the commodity nature of the Soda Ash and the potential headwinds faced by the industry due to falling realisations, the valuations have been supressed. We also note that should the street assign a ₹10-11 trillion valuations to Tata Sons, the intrinsic valuation of the listed Tata Chemicals business is 5-7x FY25 PE, which could potentially re-rate should the investment be liquidated at/or post IPO,” Vidit Shah said in a note.
“The market value of Tata Sons’ listed investments is estimated at ₹16 trillion and the book value of the unlisted investments is ₹0.6 trillion. It is worth noting that the market value of the unlisted investments could be much higher( ₹1-2 trillion) given the groups foray into semiconductors and EV batteries,” he added.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it’s all here, just a click away! Login Now!
Download The Mint News App to get Daily Market Updates.
Published: 07 Mar 2024, 08:30 PM IST
