Tata Sons Ltd. is expected to achieve a valuation of up to 8 trillion rupees ($96 billion) in its upcoming initial public offering, likely to occur within the next 18 months, as per Mumbai-based investment banking firm Spark PWM Pvt.
The Indian conglomerate, known for its stakes in major companies like Tata Consultancy Services Ltd. and Tata Motors Ltd., was categorized as an “upper-layer” non-banking financial company by the central bank in September 2022. This classification entails that such entities must seek a public listing within three years. Analyst Vidit Shah noted in a March 4 report that Tata Sons possesses various value drivers, including its unlisted investments in emerging segments such as semi-conductors and EV batteries, which could significantly enhance its worth over time.
The potential IPO of Tata Sons would invigorate India’s IPO market, witnessing increased activity as valuations soar. The country has experienced a surge in listings, with 56 debuts recorded since the beginning of 2024, more than double compared to the same period last year.
Shah estimates the market value of Tata Sons’ listed investments at around 16 trillion rupees, while its privately-held stakes are valued at approximately 1-2 trillion rupees. He anticipates investors to apply a discount ranging from 30-60% for the holding company.
Even with a conservative estimate, a 5% stake in Tata Sons at a peak valuation of $96 billion would surpass the size of Life Insurance Corp of India’s $2.7 billion IPO in 2022. Additionally, Shah believes that the IPO could simplify the complex holding structure of the Tata Group, possibly leading to the liquidation of holdings within the conglomerate by some of its listed firms.
Shah suggests that while approximately 80% of Tata Sons’ holdings may not be monetizable, the restructuring process could trigger a re-evaluation of the company’s worth.
