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    Tata Chemicals soars to highest on parent's listing talk

    Synopsis

    According to a recent note by Spark Private Wealth Management (PWM), the Reserve Bank of India classified Tata Sons as an 'upper layer' NBFC last year, which makes it mandatory for the company to list itself on the exchanges by September 2025.

    Tata ChemicalsETMarkets.com
    The intrinsic value of Tata Chemicals is currently around ₹10,900 crore, which is 11 times the company's one-year forward earnings.
    Mumbai: Shares of Tata Chemicals on Wednesday jumped to their highest level in more than a year as the company is seen as the best placed to benefit from the potential listing of Tata Sons.

    According to a recent note by Spark Private Wealth Management (PWM), the Reserve Bank of India classified Tata Sons as an 'upper layer' NBFC last year, which makes it mandatory for the company to list itself on the exchanges by September 2025.

    While Tata Sons is the promoter of Tata Chemicals and holds a 31.90% stake in the company, Tata Chemicals also holds more than 10,000 shares of Tata Sons, data from its annual report showed.

    The shares, which jumped 11% on Wednesday to close at ₹1,178.45 on the NSE, have risen over 25% in five trading sessions.

    "...the only realistic way to get exposure to the potential value unlocking (of Tata Sons stake) is via Tata Chemicals wherein the ownership of Tata Sons potentially amounts to around 80% of the company's market capitalisation," Vidit Shah of Spark Capital said.
    Tata Chem Soars to Highest on Parent’s Listing TalkAgencies

    Tata Sons could reportedly be valued at around ₹11 lakh crore, and assuming a holding company discount of around 60%, the value is likely at ₹6.36 lakh crore, Spark PWM said in a recent report.

    This implies that the 3% stake held by Tata Chemicals would be around ₹19,850 crores, which is as much as two-thirds of Tata Chemicals' market capitalisation of ₹30,021 crore as of Wednesday.

    Even if the value of the shares of Tata Sons held by Tata Chemicals is discounted by about 30%, it would be close to ₹14,000 crore.

    The intrinsic value of Tata Chemicals is currently around ₹10,900 crore, which is 11 times the company's one-year forward earnings. These valuations could see a re-rating if there is an improvement in the realisations of soda ash, Shah said in the report.

    "We also note that should the Street assign a ₹10-11 lakh crore valuations to Tata Sons, the intrinsic valuation of the listed Tata Chemicals business is ~5-7x FY25 PE, which could potentially re-rate should the investment be liquidated at/or post IPO," he said.



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