Tata Sons May Be Valued At Rs 11 Lakh Crore In IPO By September 2025, Says Spark

Tata Sons Ltd. could be valued at as high as Rs 11 lakh crore in a potential initial public offering in a year and a half, according to Spark Capital.

The investment bank cited a regulation of the Reserve Bank of India that requires NBFC-Upper Layer to mandatorily listed within three years of getting that tag. The Tata Group's holding company will be required to list on the exchanges by September 2025 as it was classified as upper-layer non bank financial company in October 2021.

The company could fetch a valuation of Rs 11 lakh crore, and the IPO size will likely be around Rs 55,000 crore, according to Spark Capital.

It said that 80% of Tata Sons' holdings might not be monetisable but the process of restructuring could trigger a re-rating. "We believe that Tata Sons could potentially fetch a value of Rs 7–8 lakh crore at current market capitalisations of Tata Group companies."

Market Value Of Investments

The market value of Tata Sons' listed investments is estimated at Rs 16 lakh crore, and the book value of the unlisted investments is Rs 60,000 crore. The market value of the unlisted investments could be much higher, given the group's foray into semiconductors and EV batteries.

Investors are likely to give a holding company discount of 30–60%, it said, citing the range for Godrej Industries and Bajaj Holdings. Spark values Tata Sons at Rs 7.8 lakh crore factoring in a 60% discount of its listed investments and valuing the unlisted investments at Rs 1.6 lakh crore.

A change in the holding company discount assumption of 10% could lead to a Rs 1.5–1.6-lakh crore change in the equity value of Tata Sons."

Tata Chemicals The Only Potential Play

The intrinsic valuation of Tata Chemicals is 11 times the FY25 PE, according to the note. The valuations have been suppressed, given the commodity nature of the soda ash and the potential headwinds faced by the industry due to falling realisations.

The street should assign a Rs 10–11-lakh crore valuation to Tata Sons, the note said. Then the intrinsic valuation of the listed Tata Chemicals business is 5–7 times its FY25 earnings, which could potentially re-rate should the investment be liquidated at or post-IPO.