Mixed show by Tata firms post-Mistry

N. Chandrasekaran, Chief Executive Officer and Managing Director, Tata Consultancy Services (TCS),

Exactly a year ago, a boardroom coup saw Cyrus Mistry ousted as the chairman of Tata Sons in an abrupt manner, trigger a long-drawn out corporate battle which is far from finished yet.

While the last one year saw a slew of negative news hit the Tata Group, the listed entities of the conglomerate witnessed a mixed run on the bourses with most of the better-known companies under-performing vis-a-vis the benchmark indices.

Sector heavyweights such as TCS and Tata Motors have under-performed the benchmark Sensex. Tata Steel and Tata Chemicals, however, have managed to perform better than the 30-share barometer that gained 15.36% in the last one year.

Between October 24, 2016 – when Mr Mistry was removed as the chairman – and October 23, 2017, group companies such as Tata Coffee, Tata Communications, Tata Power, Indian Hotels, Tata Teleservices and Tata Elxsi have fared badly compared to the Sensex with some even ending in the red.

Shares of Tata Motors lost nearly 25% in the one-year period with the share price falling from Rs. 559.10 to Rs. 422.30. Incidentally, the fall has come at a time when the BSE Auto has gained more than 10% in the same period.

TCS, which provides the bulk of the dividend income to the holding entity of the diversified business house to fund its philanthropic activities, has gained only 6.51% in the last one year. To be fair to the software giant, the last one year has been a bit rough for most software companies with the BSE IT gaining less than 4% in the same period.

Market participants, however, have a positive outlook on the group as current chairman N Chandrasekaran has been undertaking various initiatives to restructure the highly-diversified entity with a market capitalisation of nearly Rs.9 lakh crore.

“In a short span of one year, Chandra has taken many decisions. This is the beginning. The Tata house would see far reaching changes in the days to come,” said Arun Kejriwal of Kejriwal Research & Investment Services.

Tata Steel (up 66.91%), Titan (up 60%), Tata Sponge Iron (42.76%), Tata Global Beverages (up 31.95%) and Tata Chemicals (up 26.08%) have all performed better than the benchmark equity index in the last one year.

“Market behaviour has a lot to do with the ecosystem of the industry and perception. While perception is within the control of the management, ecosystem is not. Improvement has started and more is to follow,” added Mr Kejriwal.