InvestorQ : Who do you think has the upper hand in this corporate battle; the Mistry family or the Tata group?
vaishnavi mhatre made post

Who do you think has the upper hand in this corporate battle; the Mistry family or the Tata group?

Answer
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vidhya Laxmi answered.
3 weeks ago


While it is hard to say who has the upper hand in the deal, it must be said that Pallonji Mistry has surely timed his exit extremely well. Tatas are struggling to create value and Mistry family is struggling for liquidity. The exit has actually come as godsend for Mistry.

In the Tata family, there has been just one company generating the bulk of the group’s value. But for TCS, the Tata story would have been different. For example, losses of Tata Motors wipe out ex-TCS group profits. TCS net profit of Rs.33,000 crore is what is left.

There is also a value dichotomy. TCS accounts for over 75% of group market cap. Apart from TCS, Titan, Tata Consumer and Tata Chemicals, other group companies have been value destroyers. That was also the bone of contention between the two business families.

The onus is now on the Tata group. They blocked the pledge of shares and must now offer an exit route to Mistry. According to bank filings, 18.4% stake in Tata Sons is worth Rs.180,000 crore. Tatas may have to sell TCS shares or swap it with the Mistry family for control of Tata Sons.

The haggling will go in. Tatas will insist on holding company discount while Mistry has already earned billions from the Tata investment. The onus is largely on the Tata group to script the next phase of the story.