Latest news with #TataSons'
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Business Standard
2 days ago
- Business
- Business Standard
Tata Sons board accepts internal panel report on company secretary
Tata Sons Ltd.'s board today reviewed and accepted the findings of a three-member internal panel, which concluded that Company Secretary Suprakash Mukhopadhyay did not wilfully breach the group's code of conduct, nor did he seek personal gain at the company's expense, according to people familiar with the matter. Mukhopadhyay came under scrutiny for allegedly encouraging a former colleague to join or invest in Divinion Advisory, a wealth management firm linked to his wife and daughter. The firm includes several former Tata employees and is associated with professionals such as chartered accountant T. P. Ostwal, whose firm has previously worked with Tata Sons. Divinion's auditors have also served subsidiaries of Tata Consultancy Services. As per media reports, Mukhopadhyay had approached a few Tata officials to invest in the company. Following these allegations, Tata Sons constituted a committee to investigate the matter. The panel concluded that Mukhopadhyay, a Tata group veteran, did breach the Tata group's Code of Conduct, but that the violation was neither intentional nor aimed at making personal gains at the company's expense. Mukhopadhyay, who retired in November 2024, continues to serve on an extension. The report was discussed in detail at the board meeting today, and the panel's findings were accepted. The board also reviewed Tata Sons' financial results for the year ended March 2025, according to people familiar with the matter. Additionally, it was briefed on the upcoming initial public offering (IPO) of Tata Capital Ltd., its financial services subsidiary, which is scheduled for later this year. The meeting also covered Tata Sons' investment in the rights issue of Tata Projects Ltd., and included performance updates on key group companies, including Air India, Tata Digital, and other unlisted units.
Indian Express
5 days ago
- Business
- Indian Express
Is the TCS slowdown a buying opportunity?
Tata Consultancy Services (TCS), the largest IT services stock on the NSE and the most valuable company under Tata Sons, paid its highest-ever dividend in FY25. Despite this, TCS shares underperformed the broader market, falling 16% year-to-date, while the Nifty 50 Index rose 3.27%. This underperformance wasn't isolated. The entire IT sector witnessed a downturn, with the Nifty IT Index declining 14.6% amid weak global macroeconomic indicators, especially in the United States, which accounts for nearly 70% of India's IT export revenue. Fears of a recession in North America slowed revenue growth for several IT services companies with high exposure to the US. The recent downgrade of the US long-term issuer and senior unsecured ratings by Moody's from AAA to Aa1 has only deepened concerns about a delay in the recovery of India's IT sector, signaling slow revenue and earnings growth for FY26 as well. TCS's revenue growth in FY25 was largely driven by a significant contract with BSNL. With revenue from this deal ramping down, there are concerns about how TCS will fill the revenue gap in FY26. A slowdown in revenue could also impact TCS's dividend per share. But why is that such a big deal? TCS is the crown jewel in the Tata Sons portfolio and its largest dividend contributor. Tata Sons owns 71.7% of TCS, and in FY24, TCS paid Rs 18,958 crore in dividends, accounting for 88% of Tata Sons' total dividend income. In FY25, this figure rose to Rs 44,962 crore, of which Tata Sons is estimated to have received Rs 32,269 crore. Dividends from TCS represent 49% of Tata Sons' standalone revenue TCS dividend and share buyback accounted for ~92% of Tata Sons' operating income during the FY17-FY24 period. Tata Sons uses the income received from its holdings to invest in new businesses, such as the funding for the turnaround of Air India, the Rs 91,000 crore Dholera semiconductor fab first plant project, and the Rs 27,000 crore Assam semiconductor ATMP project. In FY24, TCS's dividend and buyback proceeds helped Tata Sons to repay all its debt and avoid the need to list on the stock exchanges, giving it the flexibility to undertake high-risk, capital-intensive projects. The significance of TCS dividends in Tata Sons' finances makes one wonder whether a slowdown in TCS earnings could spell concern for Tata Sons. Analysing the trend of the last 10 years, TCS revenue growth has slowed in FY18 (the US-China trade war), FY21 (pandemic), and FY24 (recession fears). The slowdown in revenue growth led to a decline in dividends paid as earnings fell. Each time, the company rebounded strongly. After the pandemic-induced slowdown in FY21, TCS saw a 16-18% revenue growth over the next two years. It saw strong deal momentum in FY24, with total contract value (TCV) up 25% to $42.7 billion as global macro outlook showed signs of improvement with disinflation and monetary easing, supporting growth. While there was continued pressure on discretionary spending, cost optimisation and cloud transformation projects led the deal momentum. However, macroeconomic headwinds resurfaced after Trump's retaliatory tariffs, which pulled down TCS's order book by 8% in FY25. The company believes this uncertainty is temporary and FY26 could be better than FY25. At Q4 FY25 earnings call, K Krithivasan, CEO, TCS, said the company will start investing more in technology transformation or technology adoption once uncertainty clears. The last 10-year trend shows TCS has remained resilient to macroeconomic headwinds and consistently paid dividends. It even paid a special dividend for three years in a row for the first time since its IPO. One possible reason for the special dividend could be that the slowdown in the US was partially offset by strong growth in India, where TCS has been involved in nation-building transformation projects. Ever since TCS was formed, IT services exports, especially to the US, have been driving India's IT stocks. Trump's retaliatory tariffs were not directly targeted at IT services, hinting at the importance of IT service exports to both countries. However, tariffs in other sectors could increase costs for clients in retail, airlines, travel, and hospitality, and reduce their IT budgets, which could indirectly impact the revenue of IT service companies. In the meantime, government spending on IT is driving demand in India. Gartner forecasts India's IT services spending to grow 11.4% in 2025 from 8.8% in 2024 and 4.8% in 2023. TCS could benefit from this increasing spending. The company saw its revenue growth from India accelerate in the last three years, surpassing that of the US and Europe. India's fast-growing IT spending is bridging the gap created by the slowdown in the US IT spending. However, India is still a long way from bringing its IT spending to the level of the US and emerging as a key market for IT services. According to K Krithivasan, two new growth opportunities could open up in the medium to long term, once tariff uncertainties settle: Like every technology trend, AI will first disrupt the current IT service market and then create opportunities in new areas. TCS is approaching these new areas in three ways: While it is true that these are challenging times for the IT sector, the concerns of TCS earnings slowdown are perhaps overblown. TCS share price is down 22% from its December 2024 high and is trading at a 25.8x price-to-earnings (P/E) ratio, which is below its 10-year median of 26.7x and sector median of 30.28x. Brokerages have reduced their price target for TCS in light of a weak demand environment amid global macroeconomic uncertainty. However, some brokerages such as Centrum remain optimistic for the medium-term as they expect demand to be driven by strong GenAI deal momentum. To answer the question, could a slowdown in TCS earnings concern Tata Sons in the short term? Yes. However, the current slowdown could be considered a step back before taking a leap at AI opportunities. TCS continues to remain a lucrative IT stock with 52.38% Return on Equity, which is higher than its peers (Infosys – 28.8%, HCL Tech – 25%). It is an interesting stock to add to your watchlist, as it is well-positioned to benefit from increasing domestic demand and the technological shift to cloud. Note: We have relied on data from throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information. Puja Tayal is a financial writer with over 17 years of experience in the field of fundamental research. Disclosure: The writer and his dependents do not hold the stocks discussed in this article. The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.
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Business Standard
24-05-2025
- Automotive
- Business Standard
Tata Motors demerger to give shareholders long-term returns: Chandrasekaran
The proposed demerger of Tata Motors into two separate listed companies is expected to create strategic clarity and support long-term shareholder value, Tata Sons' chairman N Chandrasekaran said on Saturday. In the company's 80th Integrated Annual Report for FY25, Chandrasekaran shared that the separation process – creating distinct entities for commercial vehicles and passenger vehicles (which includes electric vehicles and Jaguar Land Rover) – is moving forward as expected. "The proposed demerger will bring greater strategic clarity and agility, enabling a more focused approach to execution and value creation, delivering superior experiences for customers, rewarding careers for employees, and long-term returns for shareholders," he said. The demerger -- already approved by shareholders earlier this month -- is set to become effective in the second half of 2025. Shareholders will receive equivalent shares in both newly-listed companies. Looking ahead to FY26 Commenting on the company's future direction, Chandrasekaran said: "We step into FY26 with confidence in our strategy, strength in our execution, and belief in our people." He added that Tata Motors is keeping a close watch on global uncertainties, such as shifts in international trade and varying adoption rates of electric vehicles in different countries. "We remain vigilant to worldwide volatility, including the impact of changes in global trade conditions and the varying degrees of adoption of electric vehicles across different markets and evolving technologies, to accelerate our production plans while delivering value to our customers," he said. The company aims to maintain steady growth, improve customer satisfaction, and drive innovation in safer, cleaner, and more connected transport solutions. Embracing AI and automation Chandrasekaran noted that Tata Motors is also increasing the use of automation and artificial intelligence to boost operational agility and prepare its manufacturing systems for the future. "As we grow, we are also embedding greater automation and AI into our operations, enhancing agility and efficiency while shaping a future-ready manufacturing ecosystem," he said. He highlighted the significant opportunities AI and generative AI bring to every part of the business – from the design and manufacturing of vehicles to their performance on the road. "AI in vehicles is improving safety, increasing fuel efficiency, and providing drivers with enhanced connectivity features. This is the new context in which we craft our strategies for the future," Chandrasekaran added. Tata Motors demerger: Key details Under the plan, Tata Motors will divide its commercial vehicles business, including all associated assets, staff, and investments, into a new entity named TMLCV. At the same time, the existing passenger vehicles business (TMPV) will be merged back into Tata Motors Limited (TML), which remains listed. As per the agreed scheme, for every fully paid share of ₹2 held in TML, shareholders will get one fully paid share of ₹2 in TMLCV. This is referred to as the 'Entitlement Ratio'. Once the demerger is effective, both TMLCV and TML will be renamed, resulting in two independently listed companies. The demerger and merger will occur at the same time, on what is termed the 'Appointed Date'. The asset split between the two new companies is expected to be in a 60:40 ratio. Tata Motors has said that the restructuring would allow both businesses to pursue their distinct goals more effectively, strengthen responsibility within each unit, and improve value for shareholders. The company also clarified that there would be no negative effects on employees, customers, creditors, or partners.
Reuters
17-03-2025
- Business
- Reuters
Tata Sons' move to boost stake in Tata Play gets Indian regulatory clearance
March 17 (Reuters) - Tata Sons' acquisition of an additional 10% stake in Tata Play from an affiliate of Singaporean sovereign wealth fund Temasek Holdings has received regulatory clearance, the Competition Commission of India (CCI) said on Monday. The deal to buy Baytree Investments (Mauritius) Pte's holding in the direct-to-home (DTH) and digital content distribution platform will raise Tata Sons' stake to 70%. Walt Disney (DIS.N), opens new tab owns the remaining 30% of the joint venture. Tata Play and Airtel Digital TV are close to merging their satellite TV businesses, creating a $1.6 billion entity, as they seek to navigate the ongoing shift of subscribers to digital streaming, as per media report. Tata Play and Airtel Digital TV accounted for more than 35 million paid subscribers as of September last year, representing more than half of India's 60 million DTH subscriber base, according to a government report.
