Speculation is once again rife regarding Tata Sons, the primary holding company of the Tata Group, and whether it will be listed on the stock market within the stipulated timeframe. Current indications suggest that Tata Sons is not actively preparing for an IPO (Initial Public Offering). The primary reason for this is the regulations of the Reserve Bank of India, which are currently under review.
RBI's Strictness is the Reason for Listing
In 2022, the Reserve Bank of India placed Tata Sons in the 'Upper Layer' of Non-Banking Finance Companies (NBFC-UL). As per regulations, companies in this category are required to be publicly listed within three years. This meant that Tata Sons was required to be listed on the stock market by September 2025.
However, the very nature of Tata Sons is such that it is not directly a financial services company dealing with retail customers. Its primary function is to invest in and manage Tata Group companies. This is why Tata Sons appealed to the RBI to be retained in the Core Investment Company (CIC) category and to be exempted from the 'Upper Layer' conditions.
No Immediate IPO Plans
According to sources, Tata Sons is not currently planning to go public. The company is confident that the RBI will grant it an extension to the deadline. Tata Sons initiated discussions last year to clarify its position.
If the RBI is in favor of postponing the listing deadline or re-recognizes Tata Sons as a CIC, the company may be relieved of the obligation to go public.
Tata Trusts' Control and Structural Issues
Tata Trusts controls more than 66 percent of Tata Sons. Additionally, the company holds stakes in several leading companies such as TCS, Tata Motors, Titan, Tata Power, and Tata Steel. This holding structure strategically strengthens the company.
If Tata Sons is listed on the stock market, its financial position, shareholding structure, and strategies would become publicly transparent. While this may benefit investors, it could also expose the company to external acquisition or takeover possibilities.
Currently, Tata Sons is a private company, and its directors can directly prevent any unwanted acquisition attempts. However, if the company goes public, controlling such efforts will not be easy.
Shapoorji Pallonji Group May Face Setback
The Shapoorji Pallonji Group has the most interest in the listing of Tata Sons. This group holds approximately 18.37 percent stake in Tata Sons. The debt-ridden group was planning to raise capital by selling its stake. However, if the listing is postponed, it could face a significant setback.
Market analysts believe that the Tata Sons IPO could have provided the Shapoorji Pallonji Group with a good opportunity to sell its stake, as the market value of the shares would be openly revealed. But now, the group may have to postpone its plans.
Eyes on the Government and RBI's Stance
Now, the focus is on what stance the RBI takes on Tata Sons' request. Recently, Finance Secretary Sanjay Malhotra indicated that the rules for NBFC companies are being reviewed and some changes may be made over time. According to him, "It is necessary to adapt policies to the current situation, and in such a situation, some relief may be given."
The RBI's review process is still ongoing, and no official decision has been made. However, according to sources, a concrete direction may be available in the next few months.
What Happened in Previous Years
Discussions about the listing of Tata Sons first intensified when the company was placed in the NBFC-UL category. Since then, the question has consistently been raised whether the holding company of such a large corporate group should be public or not.
In 2023 and 2024, the company did not take any steps that suggested it was moving towards an IPO. No bankers were appointed, nor were any preliminary documents prepared.
Market Reaction and Monitoring
There are different opinions regarding the potential listing of Tata Sons on the stock market. Some analysts believe that this listing will increase the transparency of the Tata Group and provide investors with better information. Others see it as a risk, especially when it comes to acquisitions and shareholding control.
Many major players in the market are also awaiting the RBI's decision, wanting to know whether India's largest corporate holding company will finally go public or not.
