Shares of Tata Chemicals led a sharp rally among Tata Group stocks this week, surging 13% as renewed speculation about a Tata Sons initial public offering (IPO) ignited buying interest. However, a leadership dispute between Tata Trusts and the board of Tata Sons erased nearly $4 billion in combined market value on Friday, capping a volatile period.
RBI Decision Ignites IPO Expectations
The rally began Tuesday after the Reserve Bank of India (RBI) reportedly rejected Tata Sons’ request to surrender its Certificate of Registration. Tata Sons had sought to be classified as an unregistered Core Investment Company, but the RBI’s decision reignited expectations that the holding company would eventually need to list its shares on the stock exchange.
Board Reappointment Sparks Controversy
Buying resumed on Thursday after the Tata Sons board approved a second five-year term for Chairman N. Chandrasekaran and initiated steps toward a long-awaited IPO. The optimism was short-lived. Tata Trusts, which holds a 66% stake in Tata Sons, opposed the reappointment, calling it a “legal nullity.” The dissent raised fresh uncertainty about both the listing plan and the group’s leadership succession.
Tata Chemicals Delivers Best Weekly Performance
Among the seven listed Tata Group companies with stakes in Tata Sons, Tata Chemicals posted the strongest gains. The stock hit the 20% upper circuit on Tuesday and rose another 6.5% on Thursday. On Friday, it tumbled approximately 11% as investors reacted to the governance dispute. Still, it managed to close the week 13% higher.
The company owns a 2.5% stake in Tata Sons, valued at roughly Rs 30,052 crore. This holding is substantial compared with Tata Chemicals’ own market capitalization. Gaurav Garg, head of research at Lemonn, noted that “the Tata Sons listing story forms a large part of the valuation case for smaller listed companies. That cuts both ways, and today it cut one way,” he said after Friday’s decline.
Other Group Stocks Gain, Then Fade
Tata Investment Corporation added 8% for the week despite losing 2.5% on Friday. It holds a 0.08% stake in Tata Sons valued at about Rs 950 crore. Tata Power finished roughly 3% higher, with shares closing near Rs 375 on Friday. Tata Power owns a 1.65% stake, worth an estimated Rs 19,599 crore. The Indian Hotels Company (IHCL) gained about 2% for the week, holding a 1.11% stake valued at Rs 13,185 crore. Tata Motors Passenger Vehicles rose only 1% after a 4% gain on Thursday and a 3% drop on Friday; its 3.06% stake is worth roughly Rs 36,348 crore. Tata Steel, with a similar 3.06% stake, added about 1.4%. Tata Consumer Products ended nearly flat at a 0.5% gain, with a 0.43% holding valued at Rs 5,107.7 crore.
Governance Row Wipes Out Billions
On Friday, listed Tata Group companies collectively lost about Rs 38,361 crore ($4 billion) in market value. Tata Consultancy Services fell 3.88%, while Tata Chemicals dropped 11.04%. Tata Elxsi, Tata Motors, Tata Investment Corporation, and Tata Steel also closed lower.
Analysts said investors will now monitor whether the two sides reach a compromise or take the matter to a tribunal. Until the governance dispute is resolved, news about the Tata Sons IPO is likely to keep volatility high across Tata Group stocks.