Tata group stocks reacted positively to the outcome of the Supreme Court (SC) verdict that set aside the NCLAT (National Company Law Appellate Tribunal) order, which had re-instated Mistry on Tata Sons board and had termed current Chairman N Chandrasekaran as ‘illegal’. The apex court has also rejected Mistry’s group’s plea against the conversion of Tata Sons into a private company.
While most analysts have given a thumbs-up to the development and said that it will bring the curtains down on a fiercely fought battle between two corporate houses, it will not change things for the Tata group companies at the operational and fundamental level.
“This was a pure power tussle between two parties and will not change anything drastically for the Tata group companies fundamentally. That said, investors can look at TCS among the lot as it is a defensive play in uncertain times,” said G Chokkalingam, founder and chief investment officer at Equinomics Research.
Tata Group companies, on Friday, rallied up to 6 per cent in intra-day trade on the BSE. Among individual stocks, Tata Steel and Tinplate Company of India rallied 6 per cent each on the BSE. Tata Steel Bsl, Indian Hotels, Tata Motors, Tata Power, Titan Company, Tata Coffee, Tata Investment Corporation, Tata Chemicals and Tata Communications were up in the range of 3 per cent to 5 per cent. In comparison, the S&P BSE Sensex was up 1.3 per cent at 49,078 points.
While the National Company Law Tribunal (NCLT) Mumbai had sided with the Tatas, the NCLAT had termed Mistry’s removal illegal and reinstated Mistry as Tata group chairman. It had also termed his successor, N Chandrasekaran’s appointment illegal. The Tatas then moved the Supreme Court, seeking to overturn the NCLAT judgment.
Tata Trusts, which owns a 66 per cent stake in Tata Sons, is chaired by Ratan Tata, the patriarch of the Tata group, while the Mistry family owns 18.4 per cent stake in the company.
“Tata group stocks have done well since the past one year. The judgement is sentimentally positive, which got adequately reflected in how the related stocks reacted once the outcome was known. That said, it is always better to resolve issues outside the courts. We have been positive on Tata group stocks and continue to remain so,” said Gaurang Shah, senior vice president, Geojit Financial Services.
Over the past one year, most Tata group stocks have done well at the bourses. Except Benares Hotels, all Tata-owned stocks have given a positive return since the indices hit their recent low in March 2020. Tata Teleservices (Maharashtra) has been the biggest gainer since then, rallying a whopping 600 per cent to Rs 13.3 till the close of trade on March 25. Tata Elxsi, Tata Motors, Tata Motors DVR, Tata Chemicals, Tata Power, Tata Steel, TCS and Titan Company have moved up between 80 per cent and 375 per cent since then, ACE Equity data show.