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HomeBusinessTata Chemicals shares drop 10% amidst Tata Sons IPO uncertainty

Tata Chemicals shares drop 10% amidst Tata Sons IPO uncertainty

Tata Chemicals share price today

: Shares of Tata Chemicals surged by 36% over four trading sessions but then dropped to the lower circuit limit of 10% at Rs 1,183.45 on the BSE on Monday. This happened amid reports that the

Tata Group

is seeking to avoid the

Tata Sons IPO

. The same downward trend affected the shares of Tata Investment Corporation, which fell to the lower circuit by 5% after a 28% increase last week.
According to ET, the shares of Tata Chemicals, seen as the prime beneficiaries of a potential Tata Sons listing, were also included in the F&O ban list today.

At 2:42 PM, the stock was trading 9.89% lower at Rs 1,184.80 on the

Bombay Stock Exchange

.
The impact rippled through other Tata Group stocks as well, with Tata Consumer witnessing a 3% slip, Tata Steel shares dropping over 2%, and Tata Motors and Indian Hotels down by 1% each.

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It was earlier reported that as per

RBI regulations

, Tata Sons must undergo listing by September 2025, given its classification as an upper-layer NBFC. However, the conglomerate, valued at Rs 31 lakh crore, is reportedly considering restructuring its balance sheet. By reorganising its debt through repayment or transferring its holdings in Tata Capital to another entity, Tata Sons could potentially deregister as a core investment company (CIC) and upper-layer NBFC, thereby avoiding the listing requirement.

The RBI has already rejected a request from Tata Group seeking an exemption to the listing rule.
Last week, Tata Group stocks saw a significant increase in market capitalization, gaining Rs 85,000 crore. Much of this rally was fueled by enthusiastic retail investors, optimistic about the potential Tata Sons

IPO

.
The surge began last Monday when investment banker Spark Capital issued a report singling out Tata Chemicals as the sole potential investment opportunity in the IPO. Spark’s Vidit Shah mentioned that if the market values Tata Sons between Rs 10-11 lakh crore, Tata Chemicals’ intrinsic valuation could be 5-7 times the FY25 price-to-earnings ratio. This valuation might see an increase if the investment is realised during or after the IPO.
Calculations by the brokerage indicate that Tata Chemicals’ 3% stake in Tata Sons could be valued at approximately Rs 19,850 crore, constituting a substantial portion of the company’s market value.
Shah was further quoted as saying, “The intrinsic business of Tata Chemicals is trading at ~11x FY25 PE (worth Rs 10,900 crore), which we believe to be fair given the headwinds that the soda ash industry is currently facing. However, valuations could potentially re-rate on announcements of growth plans/ improvement in soda ash realisations.”