Tata Sons Likely To Garner Up To $96 Billion In IPO, Says Spark PWM

Analysts foresee substantial value in Tata Sons' unlisted investments, particularly as the group ventures into emerging sectors like semiconductors and electric vehicle batteries

Tata Sons, the Indian conglomerate with holdings in major companies including Tata Consultancy Services and Tata Motors, is eyeing an initial public offering (IPO) that could value the company at up to Rs 8 trillion ($96 billion) within the next 18 months, as per Mumbai-based investment banking firm Spark PWM Pvt.

According to a report by Bloomberg, the move comes after Tata Sons was classified as an 'upper-layer' non-banking financial company by the central bank in September 2022, necessitating a public listing within three years. Analysts foresee substantial value in Tata Sons' unlisted investments, particularly as the group ventures into emerging sectors like semiconductors and electric vehicle (EV) batteries.

In a note dated March 4, analyst Vidit Shah highlighted the potential for significant value growth over time. The listing of Tata Sons is anticipated to inject momentum into India’s IPO market, which has experienced a surge in valuations, with 56 companies debuting since the beginning of 2024, doubling the figures from the same period last year.

Shah estimated the market value of Tata Sons’ listed investments at  Rs16 trillion, with privately-held stakes projected to be valued between Rs 1 trillion and Rs 2 trillion. Despite potential discounts of 30-60 per cent for the holding company, a stake as small as 5 per cent could surpass the $2.7 billion IPO of Life Insurance Corp of India in 2022.

Additionally, an IPO could streamline Tata Group's complex holding structure, with listed firms possibly liquidating their holdings within the conglomerate, Shah suggested. While approximately 80 per cent of Tata Sons’ holdings may not be readily monetisable, restructuring efforts could lead to a re-rating, Shah added.

The proposed IPO of Tata Sons is expected to garner significant attention from investors, reshaping the landscape of India's corporate sector and bolstering its position in the global market.