Around 5 p.m. today, the Tata Sons board decided to replace Cyrus Mistry as chairman of the $103 billion (Rs 6.5 lakh crore) conglomerate. Within minutes #CyrusMistry and #TataSons were trending on social media and phones were buzzing with WhatsApp messages. Since the news broke after market hours, tomorrow is expected to be a big day for Tata stocks. We asked Raamdeo Agrawal, managing director and co-founder of Motilal Oswal Financial Services, about the impact of this news on the market. Edited excerpts:
Q: Will Tata stocks crash when the market opens tomorrow?
A: I don’t believe this announcement will impact the market in a big way; there may be a change of a few percentage points because of sentiment.
Q: Do you think this is a good time to buy Tata group companies?
A: This is a board-level announcement and does not change the fundamentals of the companies. The top management of all the big Tata companies is intact, and neither the pressures nor the opportunities have changed. People shouldn’t speculate and buy just because of a news break. They need to take a long-term view and invest only if they believe there’s potential. If a TCS or a Titan is slowing, that needs to be evaluated on its own. It would be imprudent to jump in just because of an announcement.
Q: The announcement came as a shock…
A: I’m hoping that the company will issue a press release that clarifies the rationale behind this decision in more detail.
Q: How do you rate Cyrus Mistry’s performance in the last four years?
A: He was a young chairman who was there for a very short period, so that does raise a few questions. During his tenure there were no drastic changes and it’s unlikely that he’s left a mark on the group.
Q: Ratan Tata has been named interim chairman. Who do you think will take over?
A: There’s no dearth of talent at the Tata group and I’m sure that the next person they choose will be good.
Additional inputs: Tania Kishore Jaleel