Tata Group loses ₹2 lakh crore of market cap from the peak as stocks give up gain

With the noise surrounding Tata Sons listing fading away, the group has given up some of the gains that it notched up over the last few days. Tata Investment Corporation is one such example, where the stock has been hitting lower circuits for the last eight sessions. The drop in Tata Investment Corp follows a stellar rally that saw the stock topping the chart of best performers on the Nifty 500 for 2024.

Similarly, shares of Tata Chemicals have come off 22% since March 7, after the stock of the chemical producer swelling as much as 40% in just six sessions through March 7, 2024. Further, Tata Consultancy Services (TCS) ended lower for the third day on Wednesday. The largest group company by market value has seen a market cap erosion of close to ₹90,000 crore during the same period.

Interestingly, both Tata Investment Corp and Tata Chemicals are heavily owned by retail investors. While more than half, or 14.4%, of non-promoter holdings in Tata Investment Corp is held by retail investors, the category owns close to 22% in Tata Chemicals. The public holding in Tata Investment Corp as of December end stood at 26.6%.

Barring Trent, all group companies have witnessed some correction in their stock prices since March 7. While TCS lost the most in absolute value, Tata Motors followed suit with an erosion of ₹36,500 crore. That was followed by Titan and Tata Investment Corp. While the market capitalisation of Titan decreased by ₹17,400 crore, Tata Investment Corp saw its market valuation fall by ₹16,600 crore during the same period.

Tata Group—the country’s largest conglomerate—commands a market capitalisation of ₹30 lakh crore as of Wednesday’s close. In comparison, the group had boasted a market value of ₹32 lakh crore on March 7, 2024. The loss in market valuation translates to a 6% drop from its peak. In contrast, the benchmark Nifty50 declined about 3% during the same period.

For Tata Sons, dividend income contributes 95% to its revenue. In FY23, the firm recorded a dividend income of ₹33,252 crore, which is a 189% increase from the previous year thanks to a big payout by the group’s cash cow, TCS. The dividend payout ratio of TCS was 158% in FY23, while Tata Sons’ holding stood at 72.4% at the end of December 2023. The net profit of Tata Sons for the year increased by 29% to ₹22,132 crore.