Tata group stocks traded mixed on Friday, August 14, continuing their weak trend following the resignation of Tata Sons' long-time chairman N Chandrasekaran earlier this week. According to Business Standard, the group's stocks witnessed a knee-jerk reaction in initial trading sessions but have since found some stability. Heavyweights including Tata Consultancy Services (TCS), Tata Steel, Tata Communications, Trent and Tata Motors Passenger Vehicles traded lower, with losses up to 6 per cent in some counters. However, Tata Motors gained nearly 2 per cent, while Nelco rose nearly 3 per cent, and Voltas and Tejas Networks also traded in positive territory. The recovery came as investors assessed the impact of Chandra's exit on the Tata group stocks ahead of the end of his term in February next year.
N Chandrasekaran is set to leave behind a remarkable legacy, creating a ₹25 lakh crore market capitalisation for the Tata group - nearly three times its value when he took charge in 2017. As per SBI Securities data, aggregate revenue of listed Tata companies rose 71% over the period, with profit after tax climbing 3.6-fold. The combined market capitalisation of listed Tata companies increased from ₹8.53 lakh crore at the start of Chandrasekaran's tenure to ₹25.21 lakh crore, creating about ₹16.67 lakh crore in market value. Titan and TCS accounted for about two-thirds of this wealth creation, with Titan adding nearly ₹4.10 lakh crore and TCS contributing another ₹3.60 lakh crore. Chandrasekaran's current term as chairman runs until February 2027, post which, he will not seek reappointment. He joined the Tata group in 1987 and became chief executive officer of TCS in 2009 before taking over as Tata Sons chairman in 2017.
Tata Motors Passenger Vehicles (TMPV) came under selling pressure after the company reported weak June quarter results on Thursday. The company's profit for Q1FY27 fell nearly 80 per cent year-on-year to ₹859 crore in the June quarter amid supply chain headwinds and persistent commodity pressure. The company had posted a net profit of ₹4,003 crore in Q1FY26. However, total revenue from operations rose 9 per cent year-on-year to ₹95,799 crore from ₹87,677 crore in the first quarter of the preceding fiscal year. According to Business Standard, this mixed performance contributed to the continued decline in TMPV shares, which were among the heavyweights trading with cuts.
According to Business Standard, brokerage firm Jefferies noted that, looking through the potential near-term market concerns related to leadership change, "we believe business fundamentals will prevail." Jefferies further added that its top picks among Tata Group companies are IHCL, Tata Consumer, Tata Steel, and Voltas. The brokerage is bearish on the outlook for Tata Consultancy Services, Tata Motors Passenger Vehicles, and Tata Power, maintaining an "Underperform" rating on all three due to growth concerns at TCS, JLR headwinds at TMPV, and execution issues at Tata Power. It has a "Hold" rating on the growth kings of the group, Trent and Titan, citing visibility concerns and valuation issues respectively. Jefferies is positive on Voltas, the largest room air-conditioner player in the country and on Titan, given the market share gains, premiumisation and rising scale of adjacencies, expecting revenue and profits to grow by 16-21 per cent.
Despite the initial sharp decline, market experts remain optimistic about the group's long-term prospects. Shrikant Chouhan, head of equity research at Kotak Securities, noted that "the fall in these stocks following the news was expected, particularly given the chairman's significant role in the growth of TCS, Indian Hotels and Tata Motors." However, he believes the times have changed, and while the new chairman's strategy will be important, these businesses are now strong enough to operate with less oversight. Sunny Agrawal, head of research at SBI Securities, said "sentimentally, after the announcement, stocks reacted negatively to the development and we think there may some overreaction from the street." He added that "strong leadership and clarity at Tata Sons will act as a catalyst to accelerate the growth." Of the 26 listed Tata Group companies, 23 fell on Monday's close, with only Tata Motors, Tata Chemicals and Voltas ending the day higher. However, analysts suggest that "the worst of the uncertainty is behind us and there could be some recovery in the stocks in the coming days," as noted by market experts.
