What’s Next in this Corporate Battle?
It appears that the final battle is going to take place between the Tata Group and Shapoorji Pallonji Group for the disputes which started around 5 years back in October 2016. This battle will be regarding the finalization of the exit strategy of SP Group Stake in the Tata Group.
Current Stake of SP Group:
- Shapoorji Pallonji Group currently holds an 18.4% stake in Tata Sons.
- According to SP Group, the valuation of their stake in Tata Sons around Rs. 1.7 Lakh Cr. to Rs. 1.8 Lakh Cr. whereas Tata Group disagrees with this claim of SP Group and presents the values of Rs. 80,000 Cr. to Rs. 90,000 Cr. for the stake of 18.4% of SP Group.
- Recently, Honorable Supreme Court has nullified the allegations on Tata Group which were charged by Cyrus Mistry and advised the group to solve the matter of valuation of the stakes within themselves.
Reasonable Valuation of SP Groups’s Stake:
- To calculate the fair valuation of the 18.5% stake of SP Group, We will take the Top-8 listed companies of Tata Group i.e., TCS, Titan, Tata Steel, Tata Motors, Tata Consumer Products, Trent, Tata Elxsi, and Tata Chemicals.
- The stake of Tata Sons in all these companies are as follows: TCS (72.16%), Titan (20.84%), Tata Steel (32.93%), Tata Motors (43.83%), Tata Consumer Products (29.39%), Trent (32.45%), Tata Elxsi (42.22%), and Tata Chemicals (31.90%).
- Total Market Capitalisation of all these Top Listed Companies of Tata Group and Market Value of Stake of Tata Son’s in these companies are presented in the image given below.
- All these Top Listed Companies of Tata Group account to Total Market Capitalisation of Rs. 16,29,670 Cr. wherein Market Value of Tata Sons is Rs. 9,86,561 Cr.
- Further, the stake of SP Group in Tata Sons is around 18.4% and as per the current market valuation of Tata Sons, the Value of Stake of the SP Group is around Rs. 1,81,527 Cr.
Options Available for SP Group:
) Tata should buy back the stake.
ii) SP Group selling it to another player, with due permission of Tata Sons.
iii) Tata’s will find another buyer for SP Group.
iv) SP Group Demanding TCS Shares instead of Tata Sons stake.
The final decision regarding the finalization of the stake value of SP Group in Tata Sons might be concluded in upcoming quarters and both the groups will agree on the most suitable manner.