A 20 per cent correction in IT major Tata Consultancy Services (TCS) along with 11 other group companies dragged the groupтАЩs market capitalisation on a year-to-date (YTD) basis till September 29. Overall, market valuation of the group declined to Rs 20.16 lakh crore at present from Rs 23.19 lakh crore on December 31 last year.
On the other hand, gains in at least 14 Tata group stocks managed to cap the downside.
With a rally of 105.50 per cent, TRF is the top grosser among the Tata group stocks. Shares of the company jumped to Rs 289.75 on September 29, 2022 from Rs 141 on December 31, 2021. It was followed by Orient Hotels (up 85 per cent), The Indian Hotels Company (up 81 per cent), Tata Investment Corporation (up 65 per cent), Tejas Networks (up 58 per cent) and Benares Hotels (up 51 per cent).
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Tata Elxsi, Trent, Tata Chemicals, Nelco, Tinplate Company Of India, Tata Consumer Products, Tata Coffee and Titan Company also gained between 0.30 per cent and 44 per cent YTD.
Of late, Tata Steel, which is down nearly 13 per cent YTD, hogged the limelight after the board of the company last week approved the amalgamation of its seven subsidiaries including Tata Steel Long Products, The Tinplate Company of India, Tata Metaliks, TRF, The Indian Steel & Wire Products, Tata Steel Mining and S&T Mining into itself.
According to market watchers, the group announced the merger of seven of its Indian subsidiaries to simplify its mammoth corporate structure. Motilal Oswal Financial Services said, тАЬTata has been trying to simplify the group structure, which will reduce its regulatory costs and improve synergies. We expect simplification of the group structure to continue ahead, but a big reduction in the number of subsidiaries will only occur after the sale/closure of its international subsidiaries.тАЭ
Brokerages BOB Capital Markets and Anand Rathi maintained тАШBuyтАЩ rating on Tata Steel with a target price of Rs 140 and 146, respectively, after the announcement of merger.
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Among the other major losers, shares of Tata Teleservices (Maharashtra) declined 50 per cent in 2022 so far. Automotive Stampings and Assemblies, Voltas, Tata Communications, Rallis India, Tata Steel Long Products, Tata Motors, Tata Metaliks and Tata Power Company also lost between 3 per cent-39 per cent YTD.
Overall, domestic equity market stood highly volatile in the ongoing calendar year due to falling rupee, tepid inflows by foreign institutional investors, rising worries over inflation and geopolitical crisis between Russia and Ukraine. Where the benchmark NSE Nifty index declined 3 per cent YTD, the Nifty IT index lost 31 per cent during the same period.
Meanwhile, market valuation of TCS declined by Rs 2.85 lakh crore to Rs 10.96 lakh crore on September 29.
While commenting on overall IT sector, brokerage Nirmal Bang Securities said, тАЬAfter two blockbuster years in 2020 and 2021, the Nifty IT index underperformed the Nifty index in 2022. The starting point for the underperformance was the runaway valuation of both Tier-1 and Tier-2 IT companies in the context of higher interest rates on the horizon. The second point was the concern developing around earnings in FY23 and FY24. The concern on FY23 was primarily to do with margins and the one on FY24 was largely to do with demand.тАЭ
