The Tata Investment Corporation share price jumped about 12% on December 24, 2024. News of the Tata Capital IPO, was reportedly what fuelled this rise.
On December 24, stocks of several Tata Group companies posted gains, with Tata Technologies advancing 4%, Tata Chemicals moving up 3%, Tata Motors up by 2%, and TCS by 1%. Perhaps the optimism building up regarding Tata Capital's IPO next year helped move the lot positively.
Sources cite that Tata Capital, including the financial services arm under the Tata Sons umbrella, intends to launch an Initial Public Offering (IPO) soon. The IPO might raise more than ₹15,000 crore. Cyril Amarchand Mangaldas and Kotak Mahindra Capital would take the advisory role for the offer. This IPO is crucial for compliance with Reserve Bank of India (RBI) regulations, which mandate ‘upper-layer’ non-banking financial companies (NBFCs) to go public by September 2025.
Tata Capital has recently closed the Tata Cleantech Capital and Tata Capital Financial Services merger, strengthening its market position. Moreover, RBI has approved Tata Capital to be converted into an NBFC-Investment Credit Company (ICC), making Tata Capital the 12th largest non-banking finance company in India.
Tata Sons holds 68.51% of Tata Investment Corporation and 92.83% of Tata Capital; hence, the promoter group retains massive control over both companies. These stakes would position Tata Capital for even more growth shortly, especially with the IPO on the horizon.
Tata Investment Corporation stock recorded an intraday high of ₹7,305 on the Bombay Stock Exchange (BSE). In 2024, it has recorded an impressive gain of 70%. Within the last two years, the stock has moved up by 276%. This shows that investors are confident in the Tata Group's developments in the financial sector.
Current Price: ₹7,344.9
Day's High/Low: ₹7,345.0 / ₹6,597.1
Market Cap: ₹371.62 billion
P/E Ratio: 89.82
52-Week Range: ₹4,170.0 - ₹9,744.4
The stock moved up by around 12% on December 24, 2024, after a losing streak of eight consecutive days. It might be in a trend reversal.
1-Day Change: +7.40%
1-Month Change: +8.16%
The stock is currently above its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, thus having a positive short-term trend.
Support Levels
S1: ₹6,467.93
S2: ₹6,394.62
S3: ₹6,279.23
Resistance Levels
R1: ₹6,656.63
R2: ₹6,772.02
R3: ₹6,845.33
The stock has high volatility. The intraday volatility rate is 9.01%, and the price movements have been highly volatile. Recent technical signals were bearish; however, the recent trend may be a recovery phase.
The stock recently witnessed a 'Sell' downgrade owing to the valuation issues, and it has the worst return on equity of only 1%, whereas price-to-earning-growth has been reported at 6.9 times. Nevertheless, Tata Investment Corporation boasts great long-term fundamentals, with operating profits growing at a CAGR of 17%.
Given the data above:
Buy: If seeking near-term gains on the back of the recent rally and upside momentum. The stock has broken out above key moving averages and has shown decent strength following a decline.
Sell: The high P/E and recent downgrade may suggest the stock is overpriced. Sell if you are conservative or prefer to invest in stocks with stronger fundamentals and lower volatility.
Recommendation: As an investor, consider individual risk tolerance and investment strategy. For investors who believe in the long-term growth potential of Tata Investment Corporation despite its current valuation concerns, it may be worth holding or buying on dips. However, for investors who prioritize valuation metrics and are concerned about potential corrections due to overvaluation signals, it might be prudent to consider selling or reducing the position.