New Delhi (TIP): Tata Group stocks reversed their previous day’s rally to trade lower on Friday, Sept 18, a day after the board of Tata Sons cleared the reappointment of N. Chandrasekaran as Tata Sons chairman for a five-year tenure and the listing of the company as mandated by the Reserve Bank of India.
In the group stocks basket, Tata Chemicals led the decline as it fell 8.08 per cent intraday, followed by Tata Investment Corporation, which declined 3.17 per cent. Tata Motors and TCS dropped 3.05 per cent and 2.75 per cent, respectively, with TCS emerging as the biggest drag on the Nifty IT index. Only a few Tata Group stocks bucked the broader trend, with Tata Capital leading the gainers, rising 1.54 per cent, while Nelco and Voltas advanced 0.88 per cent and 0.56 per cent, respectively.
The decline in the Tata Group stock follows multiple triggers relating to Tata Sons, one of which is the chairman of Tata Trust, Noel Tata, who succeeded Ratan Tata in 2024, calling the move to re-appoint N. Chandrasekaran as Tata Sons chairman illegal on Thursday. In a statement posted by the trust shortly after the announcement, it said that Chandrasekaran communicated to the Tata Sons Board his own decision not to offer himself for reappointment.
“Once such a decision has been publicly communicated, it has consequences which cannot be afterwards undone, since the Group’s employees, its lenders and counterparties, the market and the majority shareholder have all proceeded on it,” the statement said.
The Trust also issued a statement regarding the listing of Tata Sons, noting that Tata Trusts have not agreed to the listing of Tata Sons.
Noel N Tata, Chairman, Tata Trusts, said that the structure of Tata Group’s ownership is what has allowed Tata Sons to act repeatedly in ways that a purely commercial calculus would not have supported. The majority shareholder of Tata Sons is a charitable trust that uses the dividends it receives to support hospitals, universities, research, and other initiatives that serve the public interest. It exists for public purpose and for nation-building.
Noel Tata added, “That is not sentiment. It is the operating model of this House, and it has stood the test of time for more than a century. A listing will destroy its character and strike at the heart of this principle.”
On Thursday, Noel Tata also tabled a proposal from the Shapoorji Pallonji Group (SP Group) to monetise a portion of its Tata Sons shareholding, potentially providing the group with at least ?25,000 crore in liquidity.
Notably, the SP Group is the second-largest shareholder in ?India’s Tata Sons at 18.4 per cent stake. The largest stakeholder in Tata Sons is Tata Trusts with a stake of 66 per cent.
G Chokkalingam of Equinomics Research noted that one need not worry too much about the leadership when it comes to Tata Group stocks. “Exogenous factors are more dominant. If you take TCS, for example, look at what is happening in the IT services industry. There is poor single-digit growth in the industry,” he said.
Chokkalingam further added that leadership has a limited capability to handle these structural changes. “Similarly, if you take Tata Motors’ passenger vehicle business, the European automobile industry and JLR’s performance are exogenous to the leadership. So, leadership has a limited role to play.”
When oil is at $130, the rupee is weakening, and inflation is rising, the leadership cannot do much about these external factors, he explained.
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