Biggest IPO In Indian History Coming Soon? This 1 Tata Listing Could Lead To Bulls In Tata Group Stocks

The trading week that went by was splendid for Tata Group-backed stocks, and that was due to a buzz related to the listing of the most-awaited public offer, Tata Sons.

To be precise, we’re talking about the potentially biggest IPO in the history of the Indian market. While there is no official statement out, just the reports of the listing of Tata Sons and estimates of the valuation it could fetch, had investors gaga over Tata stocks.

The news of Tata Sons IPO has been happening since last year.

If Tata Sons are listed any time by 2025, there are chances Tata Group stocks will be in a symphony of bulls. Because that is exactly what happened during the trading week from March 4th to 8th.

In a holiday-shortened week, Tata Group’s market valuation rose to a record high of Rs 31.2 lakh crore, while the stocks added about Rs 85,000 crore valuation to its cap. But the majority of Tata stocks have been on a gaining spree since last week. And in the past nine trading sessions, the Group’s valuation has skyrocketed by Rs 2 lakh crore, this is higher than the valuation of the salt-to-tech conglomerate’s steelmaker, Tata Steel’s market cap which was at Rs 1.96 lakh crore as of March 8, 2024.

Stocks like Tata Chemicals, Tata Investment, Tata Power, Tata Motors, Tata Steel, Titan Company, Tata Communication and Tata Consumer saw a strong week on the buzz related to Tata Sons IPO.

During the trading week from March 4th to 8th, Tata Chemicals’ share price gained by a whopping 38%. Following closely stood Tata Investment with a weekly upside of 28% and hitting back-to-back record high levels. Also, Tata Power gained by 13%, Tata Steel surged by 9%, Tata Motors was up by 7%, and Nelco shares advanced by 6%. Additionally, Tata Consumer shares advanced by 5.10%, while Tata Communications and Titan Company were up 4% each.

But is the biggest IPO in India coming anytime soon?

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Since last week, the buzz has been that Tata Sons could fetch about Rs 8 lakh crore valuation upon listing, while it may potentially launch an IPO worth Rs 55,000 crore.

The reason why the majority expect Tata Sons to list in the first place is due to a regulation of the Reserve Bank of India (RBI).

In September 2023, RBI released yet another list of NBFCs in the Upper Layer under Scale Based Regulation for NBFCs for the year 2023-24. Under the list, Tata Sons was added to the Core Investment Company (CIC) category.

RBI also said, that despite qualifying for identification as NBFC-UL as per scoring methodology, TMF Business Services Limited (formerly Tata Motors Finance Limited) is not being included in the list of NBFC-UL in the current review due to its ongoing business reorganisation.

As per the framework, once an NBFC is classified as NBFC-UL, it shall be subject to enhanced regulatory requirements, at least for five years from its classification in the layer, even in case it does not meet the parametric criteria in the subsequent year/s.

The guidelines explain that NBFCs deemed to pose higher systemic risk need to maintain the highest corporate governance standards and a diffused ownership structure to minimise the possibility of abuse of dominance. Since NBFCs lying in the Upper Layer can cause adverse systemic risks, the regulatory tools can be calibrated on the lines of the private banks; that is, such NBFCs should be subject to mandatory listing requirements and should follow the consequent Listing Obligations and disclosure requirements.

Thereby, Tata Sons is required to be listed and the expectation is that the market debut will take place in September 2025.

However, new reports have emerged into light. And chances are that Tata Sons might be looking at options to avoid listing.

Sources told CNBC-TV18 that the conglomerate’s imminent listing appears increasingly improbable. Among the potential courses of action under consideration by Tata Sons, there is contemplation regarding the possibility of hiving off Tata Capital to ensure compliance.

Also, the conglomerate is looking at avenues like reducing its group debt.

Tata Sons is the principal investment holding company and promoter of Tata Companies. 66% of the equity share capital of Tata Sons is held by philanthropic trusts, which support education, health, livelihood generation, and art and culture. Each Tata company or enterprise operates independently under the guidance and supervision of its own Board of Directors.

In 2022-23, the revenue of Tata Companies, taken together, was $150 billion (INR 12 trillion). These companies collectively employ over 1 million people.

There are about 29 publicly listed companies backed by Tata Group.