Tale of the Tape 

Hola Amigos!

Markets failed to hold onto their afternoon gains and ended the day with a minor bump. Broader markets did slightly better, with Midcaps (+0.5%) and Smallcaps (+0.3%) seeing buying. The advance-decline ratio was evenly split.

It was an even mix of green and red across sectors. Real Estate (+1.1%), Oil & Gas (+0.5%) and Pharma (+0.5%) were the top gainers. FMCG (-0.5%) and PSU Banks (-0.4%) witnessed selling pressure.

In today’s issue of the Daily Rip, we cover the troubles in Tata Group’s boardroom, LG Electronics India IPO, buzzing stocks and more.

Honourable Mentions:

IGL jumped +6% after reports said the tax on gas sourced from Gujarat would be cut to 2% vs 15% earlier.

Vodafone Idea rallied +9% on hopes of AGR relief ahead of the British PM’s visit to India.

Check out the NSE 500 heatmap:

STOCK
From Trust to Tussle

Is the house of Tata in trouble again? Yes if you go by a crazy amount of speculation over the last week. ICYMI - multiple media reports say there’s a boardroom battle brewing for control over Tata Sons (the group’s parent firm). This is the last thing the conglomerate needs considering a lot of its companies aren’t doing that hot. Here’s a quick breakdown.

Origin story: The core problem is how Tata Trusts (a group of philanthropic trusts) exercises control over Tata Sons. Put simply, the Trusts appoints people to the Tata Sons board which in turn effectively controls the Tata Group. When Ratan passed away last year, the Trusts decided that if a Tata Sons director turned 75 y/o, they would need to be re-appointed every single year. 

Act 1: The first casualty was former defence secretary Vijay Singh whose re-appointment as a Tata Sons director was rejected in September by four Tata Trusts members led by Mehli Mistry. These four also proposed Mehli’s name as Singh’s replacement --- which was opposed by another camp led by Noel Tata (Ratan’s half-brother and the new chief) and Venu Srinivasan (ya the TVS boss). Why’s the Mehli camp upset? Well, they allegedly feel they’ve been kept in the dark by many Tata Sons decisions.

Act 2: Reports say the Mehli camp is so upset they may try to remove Venu Srinivasan at the upcoming board meeting. As a result, the GOI has stepped in and will meet multiple board members soon. PS - also on the agenda is the RBI’s order that Tata Sons needs to be listed as a public entity which adds to the chaos..

Big Picture: We’ll see how Act 3 progresses. But, Tata shareholders need to pray this isn’t Cyrus Mistry 2.0. The Tata Group’s market cap has eroded by more than -15% YTD. This is because Tata Motors, TCS, Tejas Networks, Indian Hotels and Trent are down -6% to -50% YTD, vastly underperforming the market. Tata needs to get its house in order.

Specials
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