Tata Chemicals shares witnessed a significant decline of over 9.3% on Wednesday morning following its removal from the list of stocks banned from trading in the futures and options (F&O) segment. This move allowed for the creation of new positions in the company’s stock, which was restricted during the ban period. A stock enters the F&O ban when it surpasses 95% of the market-wide positions limit (MWPL), and the ban is lifted once the open interest falls below 80%.
Earlier in March, Tata Group stocks experienced a surge of over 40%, fueled by reports suggesting that Tata Sons might consider an Initial Public Offering (IPO) in 2025 to comply with the Reserve Bank of India’s upper-layer NBFC norms. These norms mandate that an upper-layer NBFC must list within three years of notification, with Tata Sons being notified in September 2022. Tata Sons’ significant stake in Tata Chemicals positions the company as a key avenue for unlocking potential value.
However, speculation emerged in the second week of March indicating that Tata Sons may not pursue a public offering in the foreseeable future. This development dampened the excitement surrounding Tata Chemicals’ potential IPO, leading to a 10% decline in its stock value. To circumvent the IPO requirement, Tata Sons is reportedly considering a balance sheet restructuring, including debt reduction and asset transfers to another entity, to deregister as an upper-layer NBFC and bypass compliance obligations for entering the primary market, as reported by ET.
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