Shares of several Tata group firms experienced declines of up to 10% on March 11 following reports suggesting that Tata Sons may not pursue an initial public offering (IPO) in the near future. The surge in IPO anticipation had led to significant gains of up to 36% for several group stocks in the previous week.
Although Tata Sons is registered as a Core Investment Company (CIC) with the Reserve Bank of India and has been categorized as an “upper layer” NBFC, mandating listing within three years of notification, reports indicate uncertainty regarding its IPO plans. The RBI’s September 2023 notification requires Tata Sons to list by September 2025, prompting the company to explore alternative compliance avenues.
Amid the IPO buzz, Tata Chemicals emerged as a potential play, witnessing a remarkable 36% surge last week. However, reports suggesting an improbable IPO led to a sharp decline of over 10% in its stock during early trading.
The downward trend extended to other Tata Group entities, with Tata Investment Corp, Tata Technologies, Tata Consumer Products, and Tata Teleservices witnessing declines of up to 5%. Similarly, Tata Steel, Tata Power Company, Indian Hotels Company, and Tata Motors experienced decreases ranging from half a percent to over one percent.
Estimations projected Tata Sons’ potential IPO to be the largest ever, surpassing Life Insurance Corporation of India’s Rs 21,000 crore offer. Spark Capital’s report suggested a valuation of Rs 7-8 lakh crore for Tata Sons through the IPO, based on the current market capitalization of group companies.
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