What to do with Tata stocks

Even as ‘lame duck’ chairman of Tata - Mistry, one of the biggest conglomerates in the world, warns of $18 billion write-down for the group owing to expansionary asset acquisition abroad at the time of asset inflationary environment where global investors were chasing for assets,  few smart investors may well be shortlisting the stocks from Tata group to be included in their long term portfolio.

Tata Steel,Tata Motors, Indian Hotels, Tata Communications, Tata Global Beverages, Tata Teleservices (Mah), Rallis India , Voltas are all down in the range of 1 per cent to 8 per cent on Thursday on an intraday basis.

However investors need not be in a hurry to accumulate these stocks as the trouble can only increase from hereon. Now SEBI has asked for details from Tata Group management on the Cyrus Mistry accusations in the letter along with BSE & NSE seeking for detailed explanation from the group.

As one digs deeper, the statistics on profitability of the group is something which may alarm several investors. Indeed apart from TCS & Tata Motors all the other group companies are either laggards in the industry or are loss making. Very few companies are in the leadership position and at the same time profitable. On economic value added parameter, one needs to study which of the group companies qualify as economically profitable.

More clarity and comments should be seeked from the Tata Group management before investing in the quality stocks like Tata Motors and TCS. Wait and watch is the approach recommended here.