INSUBCONTINENT EXCLUSIVE:
NEW DELHI: Volatility could become the new normal for shares of Tata Group, at least in the short term, after the National Company Law
Appellate Tribunal (NCLAT) on Wednesday ordered restoration of Cyrus Mistry as executive chairman of Tata Sons.
Most stocks from the group
ended in the red following the NCLAT order
Tata Motors, which traded higher throughout the session, saw fag-end selling and ended 3.05 per cent lower
Tata Steel fell 2.21 per cent and Tata Communications plunged 7 per cent.
Analysts say that there will be short-term fluctuations in the
group’s stocks, but they don't see much impact in the long term.
Jitendra Nath Gupta, former Executive Director at Sebi said,
“Shareholders are a temporary losers because of the knee-jerk reaction that generally happens
But in the long run, the companies will have to be valued by its business plans and governance.”
AK Prabhakar, Head of Research at IDBI
Capital believes that there will not be a major impact as with Tata Group companies the thought process differs slightly
He sees the judgement as an opportunity for investors.
“I don’t think there will be structural shift, but short term negativity will be
But that will be an opportunity to buy
Tata Motors will be the most impacted due to reinstatement of Cyrus Mistry,” he added.
A two-judge panel of the tribunal said that Ratan
Tata’s actions against Mistry were oppressive and the appointment of a new chairman was illegal
The court also said Tata Sons’ move to turn private from a public company was unlawful and ordered a reversal
The order will take effect after four weeks and Tata has the option to challenge the ruling in Supreme Court.
Even if Mistry actually comes
back at the helm at the group, market experts see no major reversal of decisions taken by the current chairman, Natarajan
Chandrasekaran.
“I do not see rewinding of any of the decisions even if Mistry becomes the chairman now and sort of takes over the reins,
I do not think there will be too much turmoil really,” Prabal Basu Roy, market expert, told ET NOW.
Roy added that he does not think there
will be too much disturbance in the stocks apart from short-term fluctuations in the next one or two weeks.
Astha Jain, Senior Research
Analyst at Hem Securities said she expects volatility to continue for some more time
Though she added that she was positive on fundamentally strong companies from the group such as Tata Steel and Tata Motors.
“We advise
investors to wait and watch before taking any new call on the Tata Group companies
Tata Steel and Tata Motors are expected to return more than 10 per cent in 2020,” Jain added.
Baring select names, the ongoing calendar
year has not been very good for Tata Group companies
As per data available with Ace Equity, only seven of the 27 group stocks have given positive returns year-to-date
Among them are Tata Global Beverages (up 42 per cent), Trent (42 per cent), Titan Company (25 per cent), Voltas (18 per cent) and TCS (14
per cent).
Tata Steel, Tata Power, Oriental Hotels, Tata Elxsi, Tata Teleservices and Automotive Stampings - Assemblies are some of the
stocks that have plunged up to 61 per cent in 2019.
Tata Group is likely to challenge the NCLAT verdict in the Supreme Court
JN Gupta said that the Tribunal’s order was not the final word.
“It will come from Supreme Court and no one knows in whose favour that
Investors will have to decide whether they want to wait and watch or act right now,” he added
(With inputs from Rahul Oberoi)
