Even as different factions within the Tata Group evaluate their next move forward, stock market participants and investors seem to have brushed aside the matter, as is evident from their recommendations for trading in stocks of group company.
Ever since the tussle came out in the open on October 24, there have been few downgrades by leading brokerages with many reiterating that they continue to be ‘bullish’ or issuing ‘buy’ recommendations for the listed entities of the Tata group.
More ‘buy’ calls
As per data from Bloomberg, there are a total of 135 buy recommendations on Tata entities as against only 47 sell calls. Barring Tata Steel and Titan, all other companies have a higher number of buy recommendations.
Interestingly, while Tata Steel has more ‘sell’ recommendations, the metal major recently got a thumbs-up from J.P. Morgan. In a report dated October 27, the foreign brokerage said that it met the management of the company, which had assured (the brokerage) that the strategy for pursuing a joint venture for the European steel assets remains in place.
“Overall management reassurance is positive and given the strength in the steel environment we maintain our view that (stock) weakness should be bought into,” said the report with a price target of Rs.490. The stock is currently trading at Rs.408.60.
Tata Motors has the maximum number of buy calls at 38. Interestingly, only three brokerages – ICICI Securities, CIMB and Elara – have a ‘reduce’ recommendation on the auto major.
Software major TCS, which is the largest listed entity within the conglomerate, has a total of 23 buy recommendations with 26 hold and eight buy calls. Between December 2012 and October 2016 when Mr. Mistry was the chairman of the group, shares of TCS had gained close to 92 per cent.
Incidentally, shares of Tata Group companies were in free-fall for three consecutive trading sessions beginning October 25. However, they have stabilised since then and are moving in sync with the overall market movement or company-specific announcements.
For instance, Tata Motors gained 6.49 per cent or Rs.32.90 on Tuesday to close at Rs.540.20. The stock gained after it said that JLR, which was bought by the Tatas in 2008, reported its best-ever October retail sales of 46,325 vehicles, up 11 per cent compared to October 2015.
Voltas is another Tata-owned entity that has received major support from market participants. The air-conditioner maker has 22 brokerages with ‘buy’ recommendation as against only six ‘sell’ ratings. The average 12-month target price for the stock is Rs.376. On Tuesday, the stock closed at Rs.357.10.
Lesser-tracked
Interestingly, some of the lesser-tracked Tata entities like Tata Elxsi and Tata Sponge Iron also have more ‘buy’ calls. Tata Elxsi, a high-end design company, has four brokerages – Motilal Oswal, Centrum, Karvy and Firstcall India Equity – with ‘buy’ recommendations with nil ‘hold’ or ‘sell’ calls.
Similarly, Tata Sponge Iron has one ‘buy’ recommendation from IndiaNivesh and a hold rating by Centrum. There is no ‘sell’ recommendation on the company by any brokerage.
