Tata Sons buys group firms’ shares amid market sell-off

Stock prices are down 20-40% year-to-date

Tata Sons, the promoter company of the Tata group, on Thursday bought shares worth ~531 crore in four group companies in a bulk deal on the National Stock Exchange (NSE).

The company bought shares on a day when the stock markets racked up their largest single-day loss in terms of points.

The largest investment was made in Tata Steel, with Tata Sons buying shares worth ~222 crore at an average price of ~287 per share.

Tata Steel on Thursday ended 4 per cent lower on the NSE.

The stock is down 39 per cent since the beginning of February. Year-to-date, it is down 37 per cent.

Tata Sons also bought ~177 crore worth of shares in Indian Hotels at an average buying price of ~107. On Thursday, the share price of the hotel company was down 3.5 per cent. Year-to-date, the stock is down 23 per cent. Analysts say the hotel company can see some pressure on its stock because of coronavirus.

“The share purchase could be attributed to promoters looking to increase their stake, with prices falling to levels they deem to be below the fair value of their businesses,” said S P Tulsian, chief executive officer of sptulsian.com.

Tata Sons held 31.6 per cent in Tata Steel, and 36.4 per cent in Indian Hotels Company, as of December 31, 2019.

The company bought shares worth ~53 crore in Tata Power, and ~79 crore in Tata Motors DVR. Year-to-date, the share price of Tata Power is down 28 per cent. Tata Motors DVR shares are down 43 per cent year-to-date.

According to broking houses, promoter group companies can act during such broad market sell-offs, to arrest the sharp price declines and protect investors’ interests.

Tata Sons held 34.26 per cent in Tata Power at the end of December 2019.