Tata group's market capitalization has crossed $300 billion as shares of 27 of its 28 listed companies soared during the year, stock exchange data showed. India’s largest conglomerate increased a market value of $84.75 billion since the beginning of the year, on the back of share price gains ranging from 15% to 375% during the year.
The top contributor to the gain was Tata Consultancy Services, with its share of the group market cap at 52%, followed by Tata Steel Ltd (16.22%), Tata Motors Ltd (6.75%), Titan Co. Ltd (5.07%) and Tata Consumer Ltd (4.1%)
Six group companies have gained over 100% during the year, at the same time, nine climbed 50-90%. A total of Twelve firms saw their share price rise 15-45%. Rallis India, the only stock in the group is trading nearly 1% lower, this year.
Analysts have said Tata group stocks have surged this year as all its key group companies have survived the pandemic without any significant impact. Group companies are also maintaining debt within acceptable levels, assuaging investors.
Jaguar and Land Rover got an advantage with the global luxury car recovery and consequently, its owner Tata Motors. Similarly, the rebound in steel demand and commodity cost inflation supported Tata Steel. Recovery in domestic consumption, improved operating leverage and various cost control measures supported improvement in profitability in its various businesses.
“Thus, steady earnings growth enhanced investors’ confidence in the group and re-rating for group companies continued resulting in a strong uptick in stock prices. We expect this positive traction would continue with ramp up in vaccination drive globally and better profitability for the group in FY23", said Mitul Shah, head of research at Reliance Securities.
Investors continued to buy the group’s stocks as Tata companies see strong tailwinds in many sectors such as metals where the group is deleveraging its balance sheet every quarter taking full advantage of the upcycle. The group has also made a clear vision to be debt-free in the automobile segment by FY24.
“The focus has been on improving operational metrics and is to increase market share. The group’s focus has been sharper and delivering the outcome has been rewarded by the markets. We stay overall positive on the group companies and would like to buy them at any good dips as they will be good long term investments", said Jitesh Ranawat, head of institutional sales at Marwadi Shares and Finance Ltd.
The group’s holding company Tata Sons invested ₹2,600 crore in Tata Power Ltd last year, increasing its stake from 35.27% to 45.21%. The group also increased its shareholding in its unlisted airline business AirAsia India from 51% to 83.67% by purchasing a stake from its partner AirAsia Berhad.
The group has also entered into new lines of business such as Tata Electronics, a precision engineering and manufacturing operation; Tata Medical and Diagnostics, which makes medical devices; and Tata Digital, a consumer-centric digital business.
Tata has also made big investments in the digital economy with the acquisition of BigBasket and 1MG and a $75 million investment in CureFit.