Why Tata Sons' ₹11.5-trillion portfolio may fetch a far lower IPO value

Holding-company discounts and losses at key unlisted ventures could weigh on Tata Sons' IPO valuation, though its diversified portfolio may still command a premium

Tata Sons — which is expected to come out with its initial public offering in the next few months — is likely to be valued at a significant discount to the current market value of its stake in the group’s listed companies, based on the current valuation of listed holding companies (holdcos).

 

Its direct equity stake in 16 group companies, such as Tata Consultancy Services, Titan Company, Tata Motors Passenger Vehicles, Tata Motors, and Tata Steel, among others, was valued at ₹11.51 trillion on Friday. This gives Tata Sons a potential market capitalisation (mcap) of around ₹5.24 trillion, based on the current average valuation of the top 15 listed holdcos. These listed holdcos had a combined mcap of ₹3.29 trillion on Friday, while their stakes in various listed companies were valued at around ₹7.24 trillion at the end of the day.

 

The country’s top 15 listed holdcos, such as Bajaj Holdings & Investment, Tube Investments of India, JSW Holdings, Bengal & Assam Company, and The Bombay Burmah Trading Corporation, are currently trading at an average 54.5 per cent discount to the current value of their stakes in various listed companies.

 

The discount ranges from a low of 19.3 per cent in the case of Tata Investment Corporation to a high of 83.6 per cent in the case of Bombay Burmah, which holds a majority stake in Britannia Industries through various step-down overseas subsidiaries.

 

Bajaj Holdings — the biggest listed holdco currently — is trading at a 48 per cent discount to the value of its stakes in group companies. The holdco holds promoter stakes in Bajaj Auto, Bajaj Finserv, Bajaj Electricals, and Mukand, among others. At a 48 per cent discount, Tata Sons’ mcap is expected to be around ₹6 trillion. 

 

Companies in banking, financial services and insurance are also valued based on their book value per share or total net worth. The listed holdcos in the Business Standard sample are currently valued at 1.8x their latest networth. The 15 listed holdcos had a combined mcap of around ₹3.3 trillion on Friday, against their combined networth of around ₹1.78 trillion at the end of 2025-26 (FY26).

 

For comparison, Tata Sons reported a net worth of ₹1.79 trillion on a standalone basis at the end of FY26. This would translate into an mcap of around ₹3.22 trillion for Tata Sons. However, analysts expect Tata Sons to get a premium valuation, given its large, diversified portfolio, which includes industry leaders across sectors — something Bajaj Holdings also gets. Bajaj Holdings is currently trading at a price-to-book value ratio of around 4.5. If Tata Sons gets a similar valuation ratio, its mcap is likely to be around ₹8.11 trillion. 

 

According to some analysts, investors are also likely to assign value to Tata Sons' controlling stakes in large unlisted companies such as Air India, Tata Digital, Tata Electronics, Tata AutoComp Systems, Tata Advanced Systems, Tata Asset Management, Tata AIA Life Insurance Company, Tata AIG General Insurance Company, Tata Play, Tata Projects, and Tata Realty and Infrastructure, among others. At the end of March this year, Tata Sons had invested nearly ₹1.03 trillion in unlisted ventures, an amount that exceeds its equity investment in listed companies.

 

However, the unlisted ventures are still loss-making on an aggregate basis, as the losses of Air India, Tata Digital, Tata Electronics, and Tata Play, among others, exceed the profits of ventures such as Tata AutoComp, Tata AIA Life, and Tata AIG, among others. This is likely to weigh on the contribution of unlisted subsidiaries to Tata Sons’ overall mcap.

 

Listed holcos such as Bajaj Holdings also have significant investments in unlisted ventures. Lastly, all of Tata Sons’ investments and gains from them are reflected in its networth, which investors can use to value the company.