Value of Tata Sons equity in Tata Steel, Tata Motors zooms to Rs 84,000 cr

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 Rs 84,000 crore, up more than four times the approximate Rs 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 Rs 30,400 crore to Rs 1.27 trillion now. As a result, Tata Sons’ 33 per cent stake in Tata Steel is now worth nearly Rs 42,000 crore up from just Rs 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 Rs 96,000 crore, up from around Rs 23,500 crore at the end of FY20.
 
Tata Sons’ 44 per cent stake in Tata Motors is now worth Rs 42,000 crore, up from Rs 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 Rs 58,600 crore as equity in the listed companies.
 
Tata Motors is the single-biggest investment by the group holding company followed by Tata Steel and Tata Power. Tata Sons has so far invested Rs 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 Rs 13,567 crore.