Goodwill Investor Education Eagle’s Eyes – Stock Market Review. Tata Sons-results and the lessons therefrom

Tata Group proves once again:

Tata group with stakes in multiple business- from salt to hi-tech computers-has proved that their measured steps and strategies did pave for sustained growth and development despite the prevailing market shocks and aberrations. Tata Sons saw its profits more than doubling  in the fiscal year 2019- 2020 despite so many odds.. If you have multi products/divisions in your business basket, even when there is an external or internal shock in one, the other will come to the rescue of your bottom line. This is exactly what happened to Tata Sons- The flagship software giant has come out with good results and paid to the rescue by remitting a huge dividend .

The Tata Sons profits soared 130% to Rs 2680 cr from Rs 1145 cr in the previous fiscal- more than double! This profit is after making a huge provision of  Rs 16439 cr towards liabilities  of Tata teleservices.

The holding company viz Tata Sons has written off Rs 60,000  crof its investments  in the loss making telecom business. Surprisingly the revenue  from operations which is  mainly through dividend from group companies and royalty has gone up manifold  by 158% to Rs 24,770 cr. Primarily TCs has done well by contributing to the holding company’s revenue up to 90 %- up from 77 % in 2019.

Tata Sons has stake in over 110 companies including 28 listed companies has benefited by the dividend income  of Rs 23994 cr compared with Rs8202 cr in 2019.

The Chairman of Tata Sons Mr Chandrasekar has offered to take less remuneration of 11 % downside- i.e Rs 58 cr as against his earlier  Rs 66 Cr.

The main take away in this story could be:

  1. Like Tata Sons has diversified its operations to many sectors, Investors are also advised to diversify their investments in various sectors so that even if there is a slump in one the other will compensate.
  2. Any investor will do well to have the shares of Tata’s in their portfolio as the Tatas have always been doing business with ethics and transparency and in the field for centuries together and hence the investors funds would be safe and secure..

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