 "Cyrus Mistry, Bombay House")
Ousted Tata Sons chairman Cyrus Mistry’s resignation from the board of the group companies on Monday is likely to be a positive influence on their share prices. The stocks are also expected to gain in trade, said experts.
“It will be a sigh of relief for the Tata group stocks on Tuesday,” said Ambareesh Baliga, an independent market expert.
Other experts are on the same page as Baliga.
Deven Choksey, managing director, KR Choksey Shares & Securities, said, “Mistry stepping down as director (in these companies) could bring relief to shareholders.”
With Mistry’s resignation there will be more clarity for the companies, said experts.
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“There was confusion in some companies where Mistry was still on the board. The collateral damage would now get contained to a large extent,” said Baliga.
“They (shareholders) will be more confident that the boardroom battle will definitely not affect the business,” said Choksey.
The share price of a majority of the 25-plus listed Tata group companies, except for Tata Elxsi (up 6.1%) has fallen between October 24 — when Mistry was removed as Tata Sons chairman — and December 19.
Most of them have fallen by a higher margin when compared to the fall in S&P BSE Sensex (down 6.4%), with losses ranging between 10 and 24%. The few like TCS (down 5.8%), Tata Steel (3.6%), Tata Power (7.6%), Tata Communications (3.6%), Trent (2.1%) and Tata Investment Corporation (8.7%) among two more, reported a single-digit fall in their share price. As per data compiled by Business Standard’s research bureau, the combined loss in market cap of Tata group companies since October 24 is Rs 77,492 crore (a decline of 9.1%).
Even as this move (Mistry’s resignation) gives an upper hand for Ratan Tata, I don't believe there will be any major business plan changes whether in Tata Motors or Tata Steel, added Choksey.
On the flip side, even as there is clarity emerging for individual group companies, the battle between Mistry and Tata will continue.
“As far as Mistry is concerned, I assume the battle is far from over. Maybe, he wanted to avoid the drama in the public domain, which is why he seems to have resigned. One part of the saga is over but the main war will carry on. I don’t expect him to take it lying down,” said Baliga.
Since October 24, there have been grave accusations by both, Mistry and Tata. It may be a while before the air around these accusations is cleared. Whether or not these accusations are further investigated by regulators is yet not known, but it will have its marks on India Inc.
As Baliga put it, “There is a far possibility of the governance issues raised by Mistry getting investigated, however, corporate governance norms will have to be redefined in India, especially the role of independent directors.”
