Investors in several Tata group stocks are keeping their fingers crossed, following reports that Tata Sons, the conglomerate’s investment holding company, is looking at options to avoid taking the initial public offer  (IPO) route as mandated by the Reserve Bank of India.

The RBI rule that Tata Sons would have to get listed by September 2025 as it has been classified as an upper-layer NBFC, was known for a long time. But investors started buying Tata stocks, Tata Chemicals in particular, after investment banker Spark Capital released a report last Monday identifying Tata Chemicals as the only potential play in the IPO. Tata Chemicals rallied 31% in the last three trading sessions as it was believed to be the biggest beneficiary of the mega listing.

Spark had identified Tata Chemicals as the only realistic way to get exposure to the potential value unlocking of Tata Sons’ stake. Calculations by Spark show that Tata Chemicals’ 3% stake in Tata Sons is worth around Rs 19,850 crore or 80% of the market value of the company. Tata Motors and Tata Chemicals each own about 3% in the holding company, while Tata Power owns 2% and Indian Hotels 1%.

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Tata Chemicals’ stock rise had a rub-off effect on other group firms, which gained about Rs 76,000 crore. 

The market capitalisation of 25 Tata group companies rose to Rs 32.29 trillion as of March 7 from Rs 31.53 trillion recorded on March 4, according to stock exchange data. The other two biggest gainers were Automobile Corporation of Goa (26.8%) and Tata Investment Corporation (15.8%).

The legs to the rally may , however, be taken away when markets open on Monday, following reports over the weekend that Tata Sons is now weighing several options such as transferring its holding in Tata Capital to another group company as well as becoming a debt-free entity to shake off the tag as a core investment company and an upper layer non-banking finance company.

If launched, Tata Sons’ would have been the biggest IPO, much higher than the Life Insurance Corporation of India’s Rs 21,000 crore. Spark’s report said Tata Sons could be valued at Rs 7-8 trillion through the IPO, based on the current market capitalisation of group companies. 

Before the reports of the IPO, many of these stocks were trading in a lacklustre manner in the previous month or even over a longer period. For example, Tata Chemicals had risen just 2.3% in the past month (till March 4) and 3% over a three-month period. Similarly, Tata Power and Tata Technologies were almost flat in the past month before the rise.

However, some Tata group stocks have been rising consistently in the past month, with TRF rising by 98.8%, followed by Tata Investment Corporation (52.4%), Automotive Stampings and Assemblies (51.5%) and Trent (29.4%).