Analysts expect knee-jerk reaction to Mistry ouster from institutional investors on Tata stock counters
Tata group stocks are in for short-term volatility, when trading resumes on Tuesday after the move what analysts said was a ‘shock’ decision.
By Amit Mudgill, ETMarkets.com | Updated:
New Delhi: Tata group stocks are in for short-term volatility, when trading resumes on Tuesday after promoters Tata Sons in what analysts said was a ‘shock’ decision, made Chairman Cyrus Mistry to step down from his post.
Mistry, who was the Group Chairman since December 2012, was trying to consolidate the Tata Group business. Some analysts said the ouster may not go down well with institutional investors of the Tata stocks. Some of the Tata Group stocks had gained up to 515 per cent under Mistry’s tenure.
“It is a shocker, because Cyrus had a different way of handling things. He was consolidating the Tata businesses by selling non-crore businesses of the Tata group. He was concentrating on selling low-margin businesses and concentrating on high-margin businesses. Tatas are good as humans, but in business cycle, they are bit laid-back,” said AK Prabhakar, who heads research at IDBI Capital.
Also Read: Was Tata Sons unhappy with Mistry's approach of focusing only on cash cows?
“They closed their low-margin broking arm. How the market may react, one cannot say. But we may see some knee-jerk reaction. There will be few stocks which will react negatively,” Prabhakar said.
Tata group stocks have rallied up to 515 per cent under Mistry’s regime. Tata Elxsi (up 515 per cent), Tata Communications (up 197 per cent), Indian Hotels (up 109 per cent), TCS (up 104 per cent), Tata Motors (up 85 per cent) and Tata Chemicals (up 84 per cent) are some of the Tata group stocks which have performed quite well over the past four years.
Mistry will be replaced by Ratan Tata as interim Chairman. Tata Sons has set up a three-member committee to select a new chairman within four months. The committee includes Ronen Sen, Venu Srinivasan and Amit Chandra.
“One has to look into what Tata Sons were seeing, or whether Mistry himself lost interest. Maybe Tata Sons was trying to change things too fast for the culture of the organisation. There may be some knee-jerk reaction to the development, as Tata Group stocks have performed quite well of late. While the institutional guys may not like the development, the retail guys may still like it. So there may be some shift,” Prakash Diwan of Altamount Capital Management.
Mistry, who was the Group Chairman since December 2012, was trying to consolidate the Tata Group business. Some analysts said the ouster may not go down well with institutional investors of the Tata stocks. Some of the Tata Group stocks had gained up to 515 per cent under Mistry’s tenure.
“It is a shocker, because Cyrus had a different way of handling things. He was consolidating the Tata businesses by selling non-crore businesses of the Tata group. He was concentrating on selling low-margin businesses and concentrating on high-margin businesses. Tatas are good as humans, but in business cycle, they are bit laid-back,” said AK Prabhakar, who heads research at IDBI Capital.
Also Read: Was Tata Sons unhappy with Mistry's approach of focusing only on cash cows?
“They closed their low-margin broking arm. How the market may react, one cannot say. But we may see some knee-jerk reaction. There will be few stocks which will react negatively,” Prabhakar said.
Tata group stocks have rallied up to 515 per cent under Mistry’s regime. Tata Elxsi (up 515 per cent), Tata Communications (up 197 per cent), Indian Hotels (up 109 per cent), TCS (up 104 per cent), Tata Motors (up 85 per cent) and Tata Chemicals (up 84 per cent) are some of the Tata group stocks which have performed quite well over the past four years.
ADVERTISEMENT
Mistry will be replaced by Ratan Tata as interim Chairman. Tata Sons has set up a three-member committee to select a new chairman within four months. The committee includes Ronen Sen, Venu Srinivasan and Amit Chandra.
“One has to look into what Tata Sons were seeing, or whether Mistry himself lost interest. Maybe Tata Sons was trying to change things too fast for the culture of the organisation. There may be some knee-jerk reaction to the development, as Tata Group stocks have performed quite well of late. While the institutional guys may not like the development, the retail guys may still like it. So there may be some shift,” Prakash Diwan of Altamount Capital Management.
Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
Bookmark or read stories offline -
Download ET Markets APP
Download ET Markets APP
Tata Sons on Monday announced that its Board has replaced Cyrus P Mistry as Chairman of Tata Sons at a meeting held in Mumbai. An insider said, there was an inherent bureaucracy in the system that has gone unchallenged for years.
While Mistry, who would have completed four years at the helm in December, or any others from the group is yet to give out a reason behind this sudden decision, here are our guesses.
ADVERTISEMENT
