Tata Group firms shed $4 billion in market value amid holding company rift
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Shares of India's Tata Group companies lost $4 billion in market value on Friday, as investors reacted to heightened uncertainty over the potential listing and leadership of holding company Tata Sons following a public dispute.
The selloff followed Tata Sons' decision on Thursday to reappoint Chairman N. Chandrasekaran for five years and move towards complying with RBI rules that could require a listing, despite opposition from its 66% shareholder, Tata Trusts.
The moves deepened a dispute over governance and succession, raising concerns about capital allocation, leadership uncertainty and the impact of a potential Tata Sons listing on the group's structure.
About 383.61 billion rupees ($4.00 billion) was erased from the combined market value of listed Tata Group companies on Friday, from about $268.5 billion at Thursday's close, Reuters calculations based on exchange data showed.
Shares of flagship Tata Consultancy Services closed down 3.88%, while Tata Chemicals slumped 11.04% and Tata Motors Passenger Vehicles fell 3.4%.
Tata Elxsi dropped 3.4% and Tata Investment Corporation lost 2.55%, while Tata Steel slipped 0.93%.
Some group stocks bucked the trend, with Tata Capital rising 2.42%, Tata Power gaining 1.57% and Tata Motors adding 1.56%.
Friday's declines reversed some of Thursday's gains in group stocks that followed news of Chandrasekaran's reappointment.
Governance concerns were weighing on sentiment towards Tata Group stocks, although individual companies remain exposed to their own industry-specific fundamentals, said Mayank Jain, market analyst at Share.Market by PhonePe.
Tata Trusts has called Chandrasekaran's reappointment "illegal" under Tata Sons' articles and opposed a listing, exposing a widening divide over the future structure of the 158-year-old conglomerate.
Chandrasekaran's reappointment "further displayed" divisions within the boardroom, said independent market analyst Ambareesh Baliga.
Separately, Tata Trusts said Shapoorji Pallonji Group, Tata Sons' second-largest shareholder, had proposed monetising part of its 18.4% stake through a two-tranche buyout that would yield at least $2.61 billion over 18 months.
On Friday, SP Group backed a potential Tata Sons listing.
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