Tata Group Stocks Rally Up To 20% After RBI Rejects Tata Sons’ Bid To Stay Private

Shares of several Tata Group companies jumped sharply on Tuesday after the Reserve Bank of India rejected Tata Sons’ application to retain its private status.

The development fuelled expectations that the holding company of the Tata conglomerate may eventually be required to list its shares on stock exchanges.

Tata Chemicals hit the 20% upper circuit on the BSE, while Tata Investment Corporation gained 15%. Other major group companies, including TCS, Tata Motors PV, Tata Elxsi and Tata Technologies, also recorded gains of up to 5%. Tata Motors, Tata Steel and Tata Consumer Products rose around 2% each.

RBI decision boosts Tata Sons listing expectations

The rally came after the central bank rejected Tata Sons’ request to surrender its registration as an upper-layer non-banking financial company (UL-NBFC). The application was submitted in March 2024.

In September 2022, the RBI had directed large upper-layer NBFCs, including core investment companies with assets exceeding ₹1 trillion, to complete stock market listings within three years.

The RBI’s decision has increased speculation that Tata Sons may have to proceed with an initial public offering. However, Tata Sons could challenge the directive, as Tata Trusts, which owns 65.9% of the company, along with Chairman Noel Tata and several trustees, have maintained that the holding company should remain private.

Analysts believe a Tata Sons listing could benefit listed Tata companies that hold investments in the parent entity by providing clearer market valuation.