Tata group smallcap stock rallies; this may be the trigger

Tata group's smallcap stock Tata Chemicals spurted in trade today (October 21) by over 14 per cent at day's high to Rs 1244.70 apiece on the BSE. At around 11:46 pm, the stock pared some of its initial gains and was up 10 per cent at Rs 1,196.9. 

The sharp gains in the stock came as the Reserve Bank of India rejected Tata Sons' appeal for exemption from mandatory listing and the same is seen to bode well for Tata Chemicals as per Zee Business Research inputs. Accordingly, Tata Sons will have to make its stock market debut by September 2025. Consequently, Tata Sons will need to gear up for listing its shares by the RBI's deadline.

Zee Business analysts highlighted that Tata Sons had been working on debt restructuring to avoid the mandatory IPO.

Interestingly, Tata Sons is registered as a CIC or core investment company and is classified as an upper-layer NBFC (non-banking financial company. Further, being registered as the CIC, Tata Sons needs to mandatorily adhere to the below stated 2 criteria:

- The company's asset base should be over Rs 100 crore.

- Also, the entity needs to enter the listed space within three years.

In FY24, Tata Sons paid a debt amount totalling to Rs 21,813 crore and surrendered its RBI license to remain unlisted. 

Share of listed Tata group companies in Tata Sons

Company             Stake

Tata Chemicals       3%

Tata Motors            3%

Tata Power              2%

Indian Hotels           1%

Tata Sons' IPO- What it means for Tata Chemicals?

The upcoming Tata Sons' IPO is seen to favour the group's commodity chemicals entity- Tata Chemicals as analysts foresee a potential value unlocking from Tata Sons' IPO. The company's 3 per cent stake in Tata Sons is valued at around Rs 19,850 crore.