Shapoorji Pallonji Group Proposes IPO for Tata Sons: Could This Boost Tata’s Market Value?

The Shapoorji Pallonji (SP) Group, which owns 18.37% of Tata Sons, has suggested that Tata Sons should look into the possibility of an initial public offering (IPO) to create more value for its stakeholders. This proposal was made during Tata Sons’ annual general meeting (AGM) held on Monday.

The SP Group praised the performance of Tata Group companies under the leadership of chairman N Chandrasekaran, indicating a possible improvement in the relationship between the two parties.

This AGM was the second one held since the death of Cyrus Mistry, the former chairman of Tata Sons, in a road accident in September 2022. Mistry’s removal in 2016 had strained relations between the SP Group and Tata Sons, leading to several legal disputes.

A source close to the situation mentioned that there are no current hostilities between the two sides. The SP Group, as a minority shareholder, provided constructive feedback and suggested that an IPO could benefit all stakeholders, including those who have held Tata Sons shares for many years.

Nishit Dhruva, managing partner at MDP & Legal, noted that an IPO could boost market sentiment, but also warned that the process would be complex due to the size and scope of the Tata Group.

Tata Sons, which recently reported a 57% increase in net profit and a 25% rise in revenue, has also made significant payments to shareholders and reduced losses in its aviation business.

The SP Group has used its stake in Tata Sons to raise money for debt refinancing. While the Tata Trusts hold a controlling 66% stake in Tata Sons, any decision to list the company would require changes to the company’s Articles of Association to allow share transfers.