Tata Sons may fetch up to ₹8 trillion valuation in IPO, says Spark PWM

“There are multiple levers of value available from the unlisted investments as the group is entering into new age segments such as semi-conductors” and EV batteries, which could deliver significantly higher value over time, analyst Vidit Shah wrote in a note dated March 4, as per the Bloomberg report.

In September 2022, the Reserve Bank of India (RBI) classified Tata Sons as an “upper-layer” non-banking financial company. The category, among other requirements, mandates that such firms seek a public listing within a period of three years.

Citing Shah, the report said the market value of Tata Sons’ listed investments is estimated at ₹16 trillion while its privately-held stakes are projected to be worth about ₹1-2 trillion.

Investors may bake in a discount of 30-60 per cent for the holding company, it added.

The Tata Sons’ listing will boost the IPO market.

In recent times, the IPO market has seen a slew of companies looking to sell shares as valuations boom.

An IPO may also “lead to the simplification of the complicated group holding structure of the Tata Group,” and may see some of the listed firms liquidate their holdings within the salt-to-software conglomerate, reported Bloomberg.

“We believe that 80 per cent of Tata Sons’ holdings might not be monetisable but the process of restructuring could trigger a re-rating,” Shah was quoted by Bloomberg as saying.

Based on a peak valuation of $96 billion, even a 5 per cent stake in the company would still be worth more than Life Insurance Corp of India’s $2.7 billion initial public offering in 2022.

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Published: 05 Mar 2024, 06:08 PM IST