Tata group firms jump ahead of CPSUs in m-cap race

It’s the first time that govt companies are not India’s biggest business group.

Krishna Kant reports.

The Tata group companies are now more valuable than all the listed central public sector undertakings (CPSUs) or companies in the country.

The key 20 listed Tata companies ended the 2021 calendar year with a combined market capitalisation of Rs 23.36 trillion, ahead of the 70 listed CPSUs, which had a combined m-cap of Rs 23.2 trillion.

In comparison, these CPSUs had a combined market capitalisation of Rs 16.7 trillion at the end of December 2020 against the Tata group firms' combined m-cap of Rs 15.7 trillion.

This is the first time since the early 1990s that central government-owned companies are not the biggest business group in the country in terms of market capitalisation.

Central PSUs were first listed on the bourses in the early 1990s and they were the biggest block in terms of market capitalisation.

The Business Standard analysis is based on a common sample of 1,043 companies that are part of the BSE500, BSE MidCap, and BSE SmallCap indices.

These companies had a combined m-cap of Rs 248.7 trillion on Friday, accounting for 93.5 per cent of the combined m-cap of all the BSE-listed companies.

The Tata group's market capitalisation is up 48.7 per cent over the past 12 months against a 38.9 per cent rise in the combined m-cap of listed CPSUs.

In comparison, the combined market capitalisation of all the 1,043 companies in the Business Standard sample was up 35.8 per cent in CY21.

These Tata group companies have outperformed the broader market over the past five years and thus have raised their share in the overall market cap of all the listed companies in the country.

The Tata group's m-cap share rose to an eight-year high of 9.4 per cent at the end of CY21, from 8.6 per cent a year ago and a low of 6.6 per cent at the end of 2017.

However, it still remains lower than the group's all-time high m-cap share of 10.2 per cent at the end of December 2013.

This has been powered by a sharp rise in the market capitalisation of key group companies, such as Tata Consultancy Services, Titan Company, Tata Steel, Tata Consumer, and Tata Motors.

The Tata group companies were among the top performers on the bourses in CY21, thanks to a sharp rise in the market capitalisation of major group firms, such as Tata Motors (up 203 per cent), Tata Power (up 192 per cent), Tata Steel (up 83.3 per cent), Titan Company (up 61 per cent), and TCS (up 28.3 per cent).

But the biggest winners were the smaller members — Tata Teleservices (Maharashtra) (up 2,500 per cent), NELCO (up 270 per cent), Tata Elxsi (up 220 per cent).

Public sector firms also had a relatively good run on the bourses in 2021 but that was not enough to compensate for CPSUs poor financial performance in the previous 6-7 years.

A poor financial performance by CPSUs has made them one of the biggest laggards on the bourses on a long-term basis.

The combined m-cap of CPSUs at the end of December 2021 is still lower than their all-time high m-cap of Rs 23.26 trillion at the end of December 2017, despite the listing of nine new CPSUs over the past four years.

Excluding the market capitalisation of these newly listed CPSUs, the m-cap CPSUs has declined by Rs 1.46 trillion or 6.3 per cent in the past four years.

Public sector companies' share in total market capitalisation declined to 9.3 per cent at the end of 2021, less than a third of their share in a decade ago.

Central PSUs accounted for nearly 28 per cent of the combined market capitalisation of all the listed companies in the BS sample at the end of December 2011 and 34.6 per cent at their peak in December 2008.

This is a sharp decline for the public sector that includes some of the country's biggest companies in terms of revenues and assets, such as Oil & Natural Gas Corp, Indian Oil, Bharat Petroleum, Coal India, State Bank of India, NTPC, Power Grid, Gail (India), Hindustan Aeronautics, General Insurance Corp, and National Mineral Development.