MUMBAI: Analysts don’t see stocks of Tata group companies continuing to bleed as it happened on Wednesday when Tata Sons chairman N Chandrasekaran announced his resignation after his term ends next February.The Tata counter lost around Rs 64,000 crore intra-day after the news trickled in earlier in the day with the group crown jewel TCS that chips in with over 80% of the holding companies profit, was the biggest loser falling 5.36%.
Tejas Networks declined 3.12%, while Tata Motors PV fell 1.95%. Tata Steel dropped 2%, Tata Elxsi by 2.17% and Tata Communications at 2.07%. Tata Consumer fell 1.88%, Tata Teleservices lost 1.21% and Tata Power by 1.17%. Indian Hotels fell 0.97%, Tata Investments by 0.88% and Trent by 0.33% reacting to his resignation.
Chandrasekaran's chairmanship from February 2017 saw group companies like Titan, TCS, Tata Steel and Trent adding the most market capitalisation. Trent was the best-performing stock, rising 1,700%. Nelco rallied 1,140%, Tata Investments rose 1,060%, Titan gained 1,020% and Tata Consumer Products rose 670%.
A Bombay House observer said, Chandra’s meteoric rise in the group over the past 40 years from joining as an engineering trainee at TCS is “a study in continuity. He joined TCS in 1987 as a fresh engineer and never left the fold, rising through the ranks to become chairman of Tata Sons three decades later.
Few executives anywhere have shaped both a company and its parent conglomerate quite so completely”. Chandra’s 9.5 years as the chair saw the market capitalisation of listed group companies rise more than 3.3x. The current market capitalisation of stands at around Rs 24.5 trillion, which was only Rs 7.8 trillion in FY16. Chandra’s biggest achievement, by most accounts, has been steering a 158-year-old conglomerate with hundreds of billion of dollars in topline, toward new-age businesses.
His most closely watched wager has been aviation. Tata Sons brought Air India back into the fold after the government divestment, ending a 69-year gap since the airline's nationalisation.The next was his entry into semiconductors. The other marquee move has been Tata's entry into chip manufacturing, a sharp departure from the group's traditional playbook.
Alongside this, he has pushed the build-out of electronics manufacturing capabilities, positioning the Tatas to ride the semiconductor ambitions. Then came the entry into EVs, batteries, smartphone manufacturing, even as the group reshaped the conglomerate increased its foothold in the traditional steel, salt and software.“Tata group stocks are unlikely to be significantly affected in the long run by Chandra stepping down,” say analysts.
In the short-run, however, the development, at best, can trigger a knee-jerk reaction in the related stocks and keep the sentiment in check.“Each business in the Tata fold,” according to G Chokkalingam, founder of Equinomics Research, “has its own dynamics and a qualified leadership team that can provide stability to the companies they lead.
Moreover, institutions this size are able to attract talent easily. “I don't think under his leadership all Tata group companies have done phenomenally well. Chandra has not been able to lift the performance of all the businesses. Challenges remain for a lot of individual companies, such as TCS, Tata Steel, Tata Motors PV etc. Among the lot, I like the businesses that are domestic economy-focused such as Tata Motors CV and Tata Capital. For Titan, the current valuation captures most of the positives,” he said.
The performance of Tata group stocks like Nelco, Tata Technologies, Titan, Indian Hotels, Tata Capital, Tata Steel and Trent gained in the range of 7-39% in this year, while Tata Elxsi, TCS, Rallis, Tata Teleservices, Tata Chemicals and Tata Consumer Products lost up to 27% during this period.
In comparison, the Nifty 50 index has slipped nearly 6% thus far in CY26.However, UR Bhat, cofounder of Alphaniti Fintech believes “this is not going to be a smooth transition, as it appears there is no obvious candidate to succeed him right now. Air India acquisition, Bhat believes, was probably a potential mistake, but things may turn around in the long run, adding that the Air India buy was also more of a sentimental decision than a purely commercial proposition.
“On the whole, Chandra has done very well and appears to be the right man for the job. However, I don’t expect group stocks to react dramatically over the long run. He may not be hands-on with the operating companies. Tata Sons is essentially the promoter and exercises its rights by voting at AGMs, but it does not take day-to-day management decisions at these companies. There could certainly be some sentimental impact, but I don’t think it would be anything dramatic,” Bhat said.
Ambareesh Baliga, an independent market analyst, too, suggests that the fall in Tata group stocks is temporary. “I don’t think the development will have a lasting impact. As things become clear and it becomes clear who the successor will be, counters will bounce back,” he said.
This is a governance-premium event, not an earnings event, is how Anirudh Garg, fund manager and partner, INVasset PMS, looks at the development.“What the market will price is not the individual but the process: an orderly transition with named succession preserves the group's governance premium. The strategy is to segment Tata exposure into two buckets. The operating franchises with self-sustaining earnings engines, TCS, Titan, Trent, Indian Hotels, face sentiment risk on headlines but little fundamental transmission, and any dislocation there is an opportunity in quality names,” he said.
Corporate lawyer HP Ranina thinks Chandra’s resignation as a "very unfortunate development" for the group and the resignation indicate differences or concerns within the group."It is not only a significant but a very unfortunate development for the group. That he resigned prematurely indicates that things are not very well and therefore he has chosen to step down. It is a very unfortunate and should have been avoided at all costs," he said.