Tata Group, ranging from salt to software companies have notched a financial feat, with their combined market capitalisation now exceeding the entire Gross Domestic Product (GDP) of Pakistan, according to The Economic Times report.
The conglomerate, known for its diverse business interests, reached a market capitalisation of over USD 365 billion or Rs 30.3 lakh crore. This is notably higher than Pakistan's estimated GDP of around USD 341 billion, The Economic Times reported.
Contrasting Figures: World Bank vs. IMF Estimates
While the International Monetary Fund (IMF) estimates Pakistan's GDP at roughly USD 341 billion, the World Bank's figures put it at around USD 376 billion. Despite the variance, Tata Group's combined market value remains in close proximity to Pakistan's GDP, marking a notable financial achievement.
Tata Group - Diverse Sectors
Tata Group has witnessed impressive growth in the stock market, mainly driven by the strong performance of key companies like Tata Motors and Trent. Titan, TCS, and Tata Power also played a significant role in boosting the conglomerate's financial performance in the past year.
At least 8 Tata companies, including the recently-listed Tata Technologies, doubled their wealth in the last twelve months. With only one exception (Tata Chemicals), all 25 Tata companies listed on stock exchanges reported a positive growth, highlighting the conglomerate's strength across different industries. Additionally, when factoring in the estimated market value of unlisted Tata entities such as Tata Sons and Tata Capital, the overall strength of the Tatas potentially increased by an additional USD 160–170 billion, added the report.
TCS Leads the Way
Tata Consultancy Services (TCS), India's largest company after Reliance, played a key role in this feat. TCS alone boasts a total market capitalization of US 178 billion, which is over half the size of Pakistan's GDP. Moreover, TCS's market capitalization contributes significantly to Tata Group's overall valuation.
Pakistan's Economic Challenges
On the other hand, Pakistan has been grappling with economic challenges for the past few years, including rising debt, declining forex reserves, and prolonged political instability. From 2011 onward, Pakistan has witnessed an almost twofold increase in its external debt, and its domestic debt has surged sixfold during this period.
Pakistan's economy, which grew by 6.1 per cent in FY22 and 5.8 per cent in FY21, is estimated to have shrunk in FY23 due to severe flood damage amounting to billions of dollars. With external debt and liabilities reaching USD 125 billion, the country is seeking funds to cover the USD 25 billion external debt payments starting in July.
The USD 3 billion program from the International Monetary Fund (IMF) is also set to expire next month. Currently, Pakistan's foreign exchange reserves are around USD 8 billion, barely enough to cover two months of essential imports. The debt-to-GDP ratio has already surpassed 70 per cent, and credit rating agencies are concerned that interest payments on the debt could consume about half of the government's revenues this year, The Economic Times report added.
