Why are Tata group stocks falling today? TTML, Tata Chem, TMPV dip up to 5%

Tata Trusts, led by Chairman Noel Tata and holding 66% of Tata Sons, has proposed merging TESS and TCE with Tata Sons to help the holding company remain private and exit the RBI's NBFC/CIC framework.

Tata group stocks today

 

Share prices of listed Tata group companies were under pressure, falling up to 5 per cent on the BSE in Tuesday’s intraday deals following reports that Tata Trusts offered a strategic recast plan for Tata Sons to skip listing. In comparison, the BSE Sensex was down 0.71 per cent at 72,252 at 09:29 AM.

 

Among individual stocks, Tata Teleservices (Maharashtra) (TTML) and Tata Chemicals slipped 5 per cent each. Share price of Tata Motors Passenger Vehicles (TMPV) hit a fresh 52-week low of ₹272.55, falling 3 per cent. Tata Investment Corporation was down 3 percent, while Tata Technologies, Tata Communications, Tata Elxsi, Trent and Tata Consultancy Services (TCS) slipped in the range of 1 percent to 2 percent.

 

 

Why are Tata group stocks under pressure?

 

According to media reports, Tata Trusts, led by chairman Noel Tata and holding 66 per cent of Tata Sons, proposed merging Tata Electronics Systems Solutions (TESS) and Tata Consulting Engineers (TCE) with Tata Sons to help the holding company remain private and exit the Reserve Bank of India (RBI’s) non-banking finance company (NBFC)/core investment company (CIC) framework.  

 

The proposed amalgamation would create an entity with ₹1.05 trillion of operating revenue, accounting for 64.3 per cent of total income, versus ₹40,072 crore of income from financial assets, while net assets would be ₹2 trillion, with group-company investments of ₹1.77 trillion, below the 90 per cent CIC threshold. READ MORE

 

The proposal requires Tata Sons board approval and a prior RBI no-objection certificate; if implemented, Tata Sons would surrender its NBFC registration. The proposal comes after the RBI rejected Tata Sons’ request to exit the regulatory framework on September 11 and the Tata Sons board subsequently backed steps towards compliance, ICICI Securities said in a note.

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