With several Tata Group companies giving outsized returns in the last one year, the market value of the salt-to-software conglomerate has grown big enough to outmuscle the entire economy of neighbouring Pakistan. At last count, the market capitalisation of India’s largest business house stood at USD 365 billion or INR 30.3 lakh crore while IMF estimates Pakistan’s GDP to be worth around USD 341 billion.Valued at about INR 15 lakh crore or USD 170 billion, Tata Consultancy Services (TCS) is not just India’s second largest company but roughly half the size of Pakistan’s economy which is staring at a full-scale economic crisis with an unmanageable debt pile.
Triumph of the Tatas
Most of the recent gains in Tata Group’s market value came from multibagger returns in Tata Motors and Trent, besides healthy rally seen in Titan, TCS and Tata Power in the last one year. At least 8 Tata companies, including the recently-listed Tata Technologies, have more than doubled wealth in the last one year – TRF, Trent, Benaras Hotels, Tata Investment Corporation, Tata Motors, Automobile Corporation of Goa and Artson Engineering.The Tatas have at least 25 companies listed on stock exchanges with only one of them (Tata Chemicals which is down 5% in one year) having eroded wealth in the last 12 months, shows data pulled from ACE Equity.
If one was to take into consideration the estimated market value of unlisted Tata companies like Tata Sons, Tata Capital, Tata Play, Tata Advanced Systems and the airlines business (Air India and Vistara), among several others, the might of the Tatas can easily grow by another USD 160-170 billion if not more.
Tata Capital, which has to bring out its IPO by next year in compliance with RBI guidelines, was commanding a market value of INR 2.7 lakh crore in the unlisted market. The storied-group’s holding company Tata Sons was estimated to be valued at around INR 11 lakh crore last year. RBI rules may also lead to Tata Sons IPO by September 2025.
Tata Play already has Sebi’s nod for IPO but the timeline is yet to be announced.
In a world where the general public and even investors are smitten by larger than life persona of billionaire families, the professionally-managed Tata Group is an exception as it is largely owned by philanthropic trusts and doesn’t have an individual promoter. Ratan Tata owns less than 1% stake in Tata Sons.
The late ‘Big Bull’ Rakesh Jhunjhunwala never shied away from publicly expressing his fascination for the Tatas.
In one of his TV interviews, the ‘Big Bull’ had described Tatas as being blessed by God and that buying Tata stocks wasn’t planned that way.
“It is a coincidence. I buy shares of companies…But, ever since Mr Chandra (Tata Group Chairperson N Chandrasekaran) took over and I understood him and what he’s trying to do, I got extremely bullish,” Jhunjhunwala had said.
Even after his death, nearly half of the family portfolio worth about INR 50,000 crore is concentrated in Tata stocks.
Plight of Pakistan
With a GDP of about USD 3.7 billion, India is 11 times bigger in size than Pakistan and predicted to become the third-largest economy by FY28 by overtaking both Japan and Germany. At present, India is the 5th largest economy.
On the other hand, Pakistan’s GDP which recorded a growth of 6.1% in FY22 and 5.8% in FY21 is estimated to have contracted in FY23 after floods caused heavy damage totalling billions of dollars.
Reported to be sitting on external debt and liabilities going up to USD 125 billion, the country is racing against time to find funds to meet the USD 25 billion of external debt payments starting July. A USD 3 billion programme from the International Monetary Fund (IMF) is also running out next month.
Pakistan’s foreign exchange reserves stand at roughly USD 8 billion which barely covers two months of essential imports. Its debt-to-GDP ratio is already above 70% with credit ratings agencies fearing that interest payments on its debt will soak up about half of the government’s revenues this year.
