Clipped from: https://economictimes.indiatimes.com/markets/stocks/news/resurgent-tata-is-most-valued-group-again/articleshow/80260910.cms
Synopsis–The Tata Group has gained Rs 1.9 lakh crore or 13 per cent in overall market cap in one month and Rs 3.33 lakh crore or 42 per cent during the past year. The Sensex gained 19 per cent last year.
Mumbai: Tata Group has regained the top position as the most valuable business conglomerate in India thanks to the rebound in some of the beaten-down shares.
The total market capitalisation of all Tata Group companies was Rs 17 lakh crore on Wednesday, followed by HDFC Group at Rs 15.25 lakh crore.
Analysts said better use of resources and buoyancy in the commodities businesses augured well for the group.
The Tata Group has gained Rs 1.9 lakh crore or 13 per cent in overall market cap in one month and Rs 3.33 lakh crore or 42 per cent during the past year. The Sensex gained 19 per cent last year.
“The market is rewarding the Tata Group stocks for making the right capital allocation decisions, which was a big challenge for them in the last several years,” said Pankaj Pandey, head of research, ICICI Securities. “Some of the group companies have undergone structural changes which are yielding results now.”
After taking over as Tata Group chairman in February 2017, N Chandrasekaran said that boosting shareholder returns and tightening capital allocation rules would be his main priorities.
As against 42 per cent gain in market cap by Tata Group stocks in the last year, HDFC Group stocks have added only 15 per cent. About one-and-a-half-years ago, the HDFC Group had overtaken the 151-year-old Tata Group.
Mukesh Ambani’s Reliance Industries and the Bajaj Group have gained 27 per cent and 11 per cent, respectively.
Eighteen of the 28 listed Tata Group companies have outperformed the Nifty during the past month.
TCS shares have surged 13 per cent compared to 7.4 per cent gain by Nifty. The software giant reported strong broad-based growth in the December quarter aided by strong execution, lower utilisation and lower travel cost. While TCS has been the main driver of the group’s fortunes, Tata Steel and Tata Motors have begun contributing after a long hiatus.
Tata Motors shares, which rallied 36 per cent in the past one month, has seen a strong re-rating following Brexit, management reshuffle, improved execution and expected recovery in vehicle sales.
Record high steel prices led by strong demand recovery and global tightness in iron ore along with inexpensive valuations helped the Tata Steel stock surge 14 per cent in one month. Tata Consumer shares have gained over 80 per cent in the past year driven by the group’s renewed thrust on the consumer business.
“Most of the individual business of Tata Group such as IT, steel, auto, chemicals or consumers are doing well for various reasons such as strong demand for commodities, while restructuring in some the domestic businesses have helped them grow further,” said Abhimanyu Sofat, head of research, IIFL Securities.
Tata Elxsi, Tata Steel Long Products, Tata Power, Tata Steel BSL among others have rallied between 15 per cent and 48 per cent in the last month.
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