Tata Chemicals shares tumble over 9.3% amid F&O ban lift and fading IPO outlook

Tata Group stocks were mostly in the red on Wednesday

Tata Chemicals Tata Chemicals stock touched the intraday low of Rs 1021.80 per share around 10.55 am on Wednesday

Shares of Tata Chemicals tumbled more than 9.3 per cent on Wednesday morning after it was removed from list of stocks banned from trading in the futures and options (F&O) sector. The stock touched the intraday low of Rs 1021.80 per share around 10.55 am on Wednesday.

According to CNBC-TV18, exit from the F&O ban will help create new positions in the company's stock and it was impossible during the ban period. A stock is prohibited in the F&O sector when it exceeds 95 per cent of the market wide positions limit (MWPL) and the ban is reversed when the open interest falls below 80 per cent.

The Tata Group stock had seen a hike of more than 40 per cent in March first week amid reports that Tata Sons may opt for IPO in 2025 in adherence with RBI's upper layer NBFC norms. As per RBI rules, an upper layer NBFC will have to list within three of being notified and Tata Sons was notified in September 2022.

For the unversed, Tata Sons holds around 80 per cent of the market valaution of Tata Chemicals and company could be the primary means for Tata Sons to tap into the potential value unlocking.

However, reports in the second week of March hinted that Tata Sons is unlikely to enter the primary market in the near future. This caused Tata Chemicals stock to plunge by 10 per cent as the excitement surrounding the potential IPO was dampened.

In order to avoid the potential IPO, Tata Sons is reportedly mulling to restructure its balance sheet by paring debts and transferring holdings to another entity. This could help Tata Sons deregister as an upper layer NBFC, thereby skirting the compliance to enter the primary market, reported ET.

With the chances of a Tata Sons public issue becoming unlikely, Tata Chemicals, which would be largest beneficiary of the IPO is set to lose out on the potential value, causing the shares to plummet.

As part of its move to pare debts, Tata Sons on Tuesday sold a minority stake in Tata Consultancy Services (TCS) for nearly Rs 9,000 crore. Other Tata Group stocks were also mostly in the red on Wednesday with Tata Motors shares tanking up to 3.7 per cent.

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