Markets are slow to grasp depths of Tata mess

Titan

18/09/2026 10:00

The author is a Reuters Breakingviews columnist.  The opinions expressed are her own.
By Ujjaini  Dutta
BENGALURU, Sept 18 (Reuters Breakingviews) - The market signals on the turmoil at India’s Tata group are misleading. An extraordinary power struggle has erupted between the holding company, Tata Sons, and its 65% owner, Tata Trusts. So far, the share-price moves at the $260 billion of listed operating companies have been relatively minor. Investors are underestimating how the corporate drama can reverberate through the group.
On Thursday, shares in companies including Tata Steel TISC.NS, Tata Chemicals TTCH.NS and Tata Motors Passenger Vehicles TAMO.NS rallied before the market closed on news that Tata Sons awarded its chair N. Chandrasekaran a third five-year term. By Friday morning, most of the gains were reversed after Tata Trusts called Chandra’s re-appointment “illegal” and laid bare the extent of the rift.
The initial lift made sense for some companies that own small stakes in Tata Sons, whose enterprise the Trusts now value at $14.4 billion. Chandra's return looked favourable because he appears willing to acquiesce to a regulatory push to list Tata Sons, a move that would crystallise the value of those stakes but which the Trusts oppose. The Trusts went to pains overnight to emphasise that any IPO would involve a long and laborious path. That reality check brought prices back down.
Yet after two tumultuous days, shares in the conglomerate's largest company, Tata Consultancy Services TCS.NS, are down barely 3.3%, equivalent to about $2.7 billion in market value since Wednesday’s close. On its 12-month forward price-earnings multiple of 13.9, per LSEG, that’s equivalent to $195 million or 3% of full-year 2026 earnings, according to Breakingviews calculations. The pain could be worse.
Investors are underpricing some key risks. The first is how a forced listing of Tata Sons could hurt the operating companies. True, most of its publicly traded entities are self-sufficient, but Tata Sons acts as a lender or financier of last resort when problems arise. Case in point: an infusion of 26 billion rupees, roughly $271 million at current exchange rates, by Tata Sons in debt-laden Tata Power in 2020. That gives support to credit ratings. A publicly traded holding company might not be able to be so generous, and downgrades could come faster in difficult times.
The second is how a power struggle could make Tata’s customers wary. Take Tata Consultancy again. It is already struggling to fend off client demands for discounts as AI erodes the value of the IT services it provides. The group turmoil could lead customers to drive a harder bargain or take business to rivals with fewer distractions in the boardroom, and where legal challenges are less likely to delay major decision making.
External partners could be put off too. Private equity group TPG has invested in Tata Consultancy's data centre business and Tata Motors' electric-vehicle unit; Starbucks SBUX.O has a tie-up with Tata Consumer Products TACN.NS, and Singapore Airlines SIAL.SI is an investor in Air India. The saga, marred by official overreach, may leave them wondering if they are partnered with a private enterprise with deep pockets or one where the state is increasingly calling the shots.
The drama is just beginning to unfold. Markets will eventually catch up. 
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CONTEXT NEWS
Shares of Tata group companies fell on September 18, with Tata Chemicals down 9.7% in intraday trading, Tata Motors 3.3% and Tata Consultancy 3%. The declines reversed some gains made the previous day.
Shares moved ⁠after Tata Sons, the group's holding company, said it had reappointed N. Chandrasekaran as executive chairman for another five years and would initiate steps to comply with a regulatory order to list itself. 
     Tata Sons is the privately held holding company for India's Tata conglomerate. The development reverses Chandrasekaran's decision on August 12 to not seek reappointment citing the absence of the board's unanimous support.
Tata Sons' ​65% shareholders, Tata Trusts, dismissed the appointment as "illegal". The Trusts, ​which oppose a listing, said Tata Sons' articles of association require both of the Trusts' nominee directors to the Tata Sons board to vote in favour of the chair. Noel Tata, one of the nominees ​and chair of Tata Trusts, voted against the proposal and that makes the reappointment void, the statement added.
On Friday, Shapoorji Pallonji Group, a minority shareholder of Tata Sons, expressed support for a potential listing.

(Editing by Una Galani; Production by Aditya Srivastav)
((For previous columns by the author, Reuters customers can click on DUTTA/ujjaini.dutta@thomsonreuters.com))