11-Mar-2024
2 mins read
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Tata Chemicals stock value witnessed a significant decline of more than 10 percent today, March 11. The downturn followed reports indicating that Tata Sons has no immediate plans for an initial public offering (IPO). Last week, Tata Chemicals experienced a remarkable 36 percent surge in its stock prices amid speculations about an upcoming IPO. However, the recent revelation suggests that the company is exploring alternative routes to comply with the Reserve Bank of India's (RBI) regulations and is currently not pursuing an IPO.
RBI Issued notification to Tata Sons
In September 2023, the Reserve Bank of India (RBI) issued a directive to Tata Sons, mandating the conglomerate to release its IPO and get listed on stock exchanges by September 2025.
Despite initial expectations, it suggests that the much-anticipated listing of Tata Sons might not materialize. In response to the RBI's directive, Tata Sons is actively exploring diverse avenues to meet regulatory requirements, with one potential strategy being the separation of Tata Capital.
Under the RBI regulations, a "core investment company" with assets valued below Rs 100 crore, and not involved in raising public funds, can avoid classification as a Credit Information Company or an "upper layer" NBFC. Consequently, such entities are not obligated to undergo the process of public listing.
TATA Group Stakes in Tata Sons
As per the recent report, four entities of TATA Groups i.e., Tata Chemicals, Tata Motors, Tata Power, and Indian Hotels hold ownership stakes in Tata Sons.
Yet, the most practical avenue to gain access to this potential value, unlocking opportunities, is through Tata Chemicals, given its possession of a 3 percent equity stake in Tata Sons.