MUMBAI: Tata Group stocks reacted negatively soon after the National Company Law Appellate Tribunal (NCLAT) ruled in favour of Cyrus Mistry on Wednesday, restoring him as the executive chairperson of Tata Sons and ruled N Chandrasekaran’s appointment to the top post as illegal.
The shares of Tata Group’s companies — Tata Motors, Tata Communications Tata Global, Tata Chemicals — fell 3-5 per cent during intraday trade on Wednesday. Tata Motors, Tata Coffee and Tata Global Beverage, and Indian Hotels were down 3-4 per cent, while Tata Power, Tata Chemicals and Tata Investment Corporation fell around 2 per cent. Tata Steel shares were also impacted in the intraday trade, closing lower than the day’s high.
Stocks may open lower on Thursday but should recover, say market participants. The four weeks time NCLAT has given, and the appeal by Tata Sons against the order, are seen as positive for the stocks. “Investors should not be in a hurry,” said V K Sharma, head (private client group), HDFC Securities, as he doesn’t see a major impact from the NCLAT order.
Market participants view the order as an unfortunate one that goes against the wishes of the shareholders of Tata Group companies in general.
Two or three major areas of confrontation between Mistry and Ratan Tata, as the appeal points out, have been with regards to cutting the losses at Tata Motors (shutting down the Nano project), some of the “expensive decisions” taken at the Indian Hotels, and losses at Tata Steel Europe.
TCS, the cash cow of the group, would also be in focus.