Tata Chemicals, Tata Power, Tata Motors, TCS shares crash up to 10%. Here's why

Tata Group stocks including Tata Chemicals, Tata Power Co, Tata Motors, Tata Consultancy Services (TCS), Tata Investments, Trent, Rallis India, Neclo, Tata Communications, Tata Steel, Tata Technologies and others face severe selling pressure during the trading session on Monday amid the reports that Tata Sons is bucking the listing.

Tata Sons, the holding company of the Tata Group, is reportedly considering ways to avoid an initial public offering (IPO), necessitated by the Reserve Bank of India’s (RBIs) decision in 2022 to categorise the core investment company (CIC) as an upper layer non-banking finance company. The principal investment holding firm owns $150 billion worth Indian coglomerate.

Tata Chemicals hit first lower circuit of 10 per cent to Rs 1,183.45 on Monday, compared to its previous close at Rs 1,314.90 on Friday. The company was seen as the biggest benificiary of the proposed listing as it owns 3 per cent stake in the promoter entity, which was value around Rs 19,500-20,000 crore. The stock had surged more than 35 per cent in the last one week.

"Recent reports that state Tata Sons is evaluating options to avoid an IPO should deflate speculation around value-unlocking at Tata Chemicals. Our fair value remains Rs 780, and we continue to expect EPS to fall by about two-thirds over FY2023-25E amid falling margins on soda ash," said Kotak Institution Equities. "The recent speculative flare-up in the stock should be considered an exit opportunity."

The RBI rule says that Tata Sons would have to get listed by September 2025 as it has been classified as an upper-layer NBFC. It was known for a long time but Tata Group seeked exemption from the listing rule by RBI but their plea was rejected. However, Tata Sons is now exploring legal experts for a remedy, said reports.

Among the marred entities, Tata Investment Corporate was also locked in the lower circuit limit of 5 per cent for the day at Rs 9,257.20. The stock had seen a rise of 28 per cent over the IPO-buzz of Tata Sons. Tata Power Co also tumbled more than 4.7 per cent to Rs 405 for the day. The stock rose 13 per cent in the last week.

Among other larger Tata Group stocks, Tata Consumer Products, Tata Steel, Tata Motors, TCS and Tata Technologies were also down up 2 per cent in the early trading session on Monday. Automobile Corporation of Goa, Rallis India, Nelco, Tata Communications and Rallis India tumbled up 7 per cent at the opening tick, after gaining up to 33 per cent in the last week.