InvestorQ : How much is the Mistry stake in Tata Sons likely to be valued at? Have the internal valuations already begun?
manisha Kolvenkar made post

How much is the Mistry stake in Tata Sons likely to be valued at? Have the internal valuations already begun?

Crowny Pinto answered.
1 year ago

While the dispute pertaining to the Mistry stake in Tata Sons still continues, internal exercises have started from both sides on the likely valuation of the stake that the Mistry family holds in Tata Sons. To begin with the equity value of Tata Sons Ltd, which is the holding company of all Tata group companies, has been pegged at $70 billion based on a very recent internal valuation exercise.

That would mean that the Mistry family’s 18.37% stake in Tata Sons would be valued at around $12.86 billion or approximately Rs.95,000 crore. While there is a brand value component to the stake, there is also a group debt of $27 billion that needs to be factored into the valuations. This figure is pretty close to the valuation of Rs.80,000 crore which the Tata Counsel, Harish Salve, had pegged for the Mistry stake during the court hearing.

However, the Mistry family has a different take on the issue altogether. Their internal valuations have pegged the value of the Mistry 18.37% stake at Rs.175,000 crore, way off what the Tata internal valuation exercise appear to hint at. It may be recollected that in the year 2016, the Tata Sons internal evaluation had valued the Shapoorji Palloonji stake at close to Rs.58,500 crore.

With the Supreme Court Bench headed by Chief Justice Bobde having ruled in favour of the Tatas on all counts, the only possible next step appears to be a phased separation. The latest valuation assumes significance as Shapoorji Pallonji Group and Tata Sons may negotiate a separation privately after the Supreme Court refused to be drawn into valuation related issues saying they were outside its ambit.

With the ongoing feud with the Tata group impacting the flow of its business from the Tatas and the burgeoning debt, Shapoorji Pallonji has been trying to monetize its stake in Tata Sons and they may be in more of a hurry to get done with it. In FY20, Tata Sons earned Rs.24,000 crore as dividends from various Tata group companies with TCS accounting for nearly 90% of this pay-out. SP group is already selling stakes in some of its group units.