Tata Sons’ value zooms on bull run

Its stake in Tata Steel & Tata Motors has jumped to ~84,000 crore from ~20,000 cr at the end of March ’20

A sharp rally in the share prices of Tata Steel and Tata Motors since March last year has led to a big jump in the market value of Tata Sons’ stake in the group’s two biggest companies.

The market value of Tata Sons’ equity stake in these companies has now jumped to nearly ~84,000 crore, up more than four times the approximate ~20,000 crore at the end of March last year.

Tata Steel has seen the biggest turnaround in its fortunes owing to a global upcycle in steel prices and metal demand in the period after the pandemic set in (see adjoining charts).

Tata Steel’s market capitalisation more than quadrupled since March 2020 from around ~30,400 crore to ~1.27 trillion now. As a result, Tata Sons’ 33 per cent stake in Tata Steel is now worth nearly ~42,000 crore up from just ~10,000 crore at the end of March last year.

Similarly, Tata Motors’ market capitalisation has gone up four times in the past 12 months as the company has reported a big jump in its passenger vehicle sales in the domestic market and at its Jaguar Land Rover division globally.

This has raised expectations of a sharp turnaround in its earnings in FY22, leading a rally in its share price. Tata Motors closed Tuesday with market capitalisation of around ~96,000 crore, up from around ~23,500 crore at the end of FY20.

Tata Sons’ 44 per cent stake in Tata Motors is now worth ~42,000 crore, up from ~9,300 crore at the end of March last year. The analysis is based on the book value or investment cost of Tata Sons’ stake in the group’s listed companies as reported by the company in its annual report and captured by the Capitaline database. The latest value is based on the company’s market capitalisation as on May 4 this year.

This has raised hopes that the group holding may starting making reasonable financial returns on its equity investment in Tata Steel and Tata Motors over the year. Together, these two companies account for nearly 60 per cent of all Tata Sons’ equity investment in the group’s listed companies. Tata Sons has invested nearly ~58,600 crore as equity in the listed companies.

Tata Motors is the singlebiggest investment by the group holding company followed by Tata Steel and Tata Power. Tata Sons has so far invested ~22,184 crore in Tata Motors, accounting for nearly 38 per cent of its all equity stakes in the group’s listed companies. Tata Sons’ equity investment in Tata Steel is around ~13,567 crore.