Tata Group stocks were the top-performing stocks on Tuesday.
Auto giant Tata Motors led the gainers in the Nifty 50, while Tata Investment and Tata Chemical were leading gains in the broader Nifty 500.
What’s driving the jump in Tata stocks?
The jump in stocks today is driven by optimism around the group’s upcoming ₹15,000 crore (£1.4 billion) IPO for Tata Capital, its flagship financial services arm.
The IPO’s value-unlocking prospects have cheered investors. Tata Capital, a non-banking financial company (NBFC), is complying with the Reserve Bank of India’s directive for “upper-layer” NBFCs to be listed by September 2025.
The IPO will include a mix of primary and secondary share sales and is expected to raise over ₹15,000 crore.
Tata Capital IPO details
Tata Group has initiated preparations for the IPO of its flagship financial services arm, Tata Capital, over a year after the successful listing of Tata Technologies, as per a Moneycontrol report.
Tata Capital is said to have been working with advisors, including law firm Cyril Amarchand Mangaldas and investment bank Kotak Mahindra Capital for the upcoming IPO
As of March 31, 2024, Tata Sons directly owned 92.83% of Tata Capital’s equity, with the remainder held by other Tata Group companies and trusts.
The company’s potential IPO follows the RBI announcement in September 2022, which categorised Tata Capital under the upper layer (UL) of NBFCs under the Scale Based Regulation.
The RBI mandates “upper layer” NBFCs to be listed within three years of being notified.
As of March 31, 2024, Tata Capital’s Assets Under Management (AUM) stood at ₹158,479 crore, reflecting significant growth from ₹119,950 crore on March 31, 2023, and ₹94,349 crore on March 31, 2022, according to a September report by Crisil Ratings.
Who owns Tata Capital?
Tata Chemicals’ rise is partly attributed to its 3% stake in Tata Sons, which holds the majority stake in Tata Capital.
Investors are hopeful of value unlocking if the NBFC is able to successfully list.
Tata Motors gained on the back of its 4.7% stake in Tata Capital, acquired after the merger of Tata Motors Finance into Tata Capital.
Tata Motors also holds a 3% stake in Tata Sons, positioning it to benefit from any value unlocking at the holding company level.
Tata Investment Corp, which holds stakes across various Tata Group entities, was the biggest gainer on Tuesday.
Tata stocks in green
Tata Investment Corporation’s share price was up 12.38% to trade at ₹7,335.00 in early trade on Tuesday.
Tata Chemicals’ share price was up 5.68% to trade at ₹1,093.00 in early trade on Tuesday.
Tata Technologies’ share price was up 2.73% to trade at ₹913.70 in early trade on Tuesday.
Tata Motors’ share price was up 2.52% to trade at ₹740.40 in early trade on Tuesday.
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