Mumbai-based investment banking firm Spark PWM Pvt. has projected that Tata Sons Ltd. could attain a valuation of up to 8 trillion rupees ($96 billion) in its anticipated initial public offering (IPO), potentially scheduled to occur within the next 18 months. Tata Sons, a prominent Indian conglomerate with stakes in leading companies such as Tata Consultancy Services Ltd. and Tata Motors Ltd., was categorized as an ‘upper-layer’ non-banking financial company by the central bank in September 2022. This classification entails, among other requirements, a mandate for such firms to pursue a public listing within a three-year period.
Analyst Vidit Shah highlighted in a note dated March 4 that Tata Sons has access to numerous levers of value stemming from its unlisted investments. He noted that the group is venturing into new age segments such as semi-conductors and electric vehicle (EV) batteries, which have the potential to generate substantially higher value over time.
The anticipated listing of Tata Sons is expected to provide a significant impetus to India’s IPO market, which has witnessed a surge in companies seeking to sell shares amid booming valuations. The South Asian country has experienced active listing activity, with the number of debuts more than doubling to 56 since the beginning of 2024 compared to the same period last year.
According to Shah, the market value of Tata Sons’ listed investments is estimated at 16 trillion rupees, while its privately-held stakes are projected to be valued at approximately 1-2 trillion rupees. He added that investors may factor in a discount of 30-60 percent for the holding company.
Even with just a 5 percent stake in Tata Sons, based on a peak valuation of $96 billion, the value would surpass the $2.7 billion IPO of Life Insurance Corp of India in 2022.
Furthermore, an IPO of Tata Sons could potentially simplify the complex group holding structure of the Tata Group. This move may prompt some of the listed firms within the conglomerate, spanning from salt-to-software, to liquidate their holdings.
According to Shah, approximately 80 percent of Tata Sons’ holdings may not be immediately monetizable. However, the restructuring process could trigger a re-rating of the conglomerate.