5 Hidden Tata Group Companies to Add to Your Watchlist

Editor's note: The Tata Group is present in every business vertical - from hospitality to airlines, and consumer goods to power and steel.

Despite being well established in all its businesses, the group has always strived to create futuristic businesses.

Just like how Adani has invested in growth sectors, Tata group is not far behind. The group has a foothold in many emerging megatrends such as electric vehicles (EV), renewable energy and now semiconductors.

While we know most of the Tata Group companies, there are some hidden gems, which do not carry the 'Tata' name tag. However, they are some of the best performing companies of the group.

Back in January 2022, we wrote about 5 such companies. Read on to know about them.

Hidden Tata Group Companies to Add to Your Watchlist

"I think, the house of Tatas is blessed by God"

This is what India's veteran investor Rakesh Jhunjhunwala said in a February 2021 interview. (Unfortunately, Jhunjhunwala recently passed away at the age of 62 in Mumbai. Even today, Jhunjhunwala continues to inspire the entire nation with his stock picking, integrity, and vision for a better India).

The big bull was very fond of the Tata Group and Natarajan Chandrasekaran who is currently serving as the chairman of Tata Sons. Many market observers think Chandrasekaran is responsible for transforming Tata Group into a profit-driven entity.

The company's success story is mainly built on humanity, philanthropy, and ethics.

The Tata Group's listed firms have grown handsomely during the last four years. Since Chandrasekaran took over in 2017, the market capitalisation of India's most diversified group have more than doubled to Rs 23 tn as on 31 December 2021.

In the past two years, a few stocks from Tata Group have managed to deliver multibagger returns to its shareholders. Do read our article on Tata group multibaggers.

Today, we'll discuss the lesser known or hidden Tata Group stocks that have been laying low for quite some time now.

1. Automotive Stampings & Assemblies

The auto ancillary firm mainly manufactures sheet-metal stampings, welded assemblies, and modules for passenger cars and commercial vehicles, largely for Tata Motors. These products account for more than 95% of the total revenue.

Product range includes body-in-white (BIW) structural panels, skin panels, fuel tanks, rear twist beam, oil sumps & suspension.

Apart from Tata Motors, Automotive Stampings & Assemblies (ASAL) sells its products to top automobile companies such as General Motors India, Fiat India, Piaggio Vehicles, Ashok Leyland, JCB, Tata Hitachi, & MG Motors.

The company has four manufacturing facilities - two in Pune, one each in Halol, Gujarat, and Pantnagar, Uttarakhand.

Presently, Tata Autocomp Systems, promoted by the Tata Group, holds a 75% stake in the company and the balance of 25% is owned by the public.

Over the past year, this lesser-known Tata group stock has surged over 2,000%, surging from Rs 35 to Rs 750 apiece.

The company's stellar performance was on the back of improving financials.

For the first half (April-September) of the financial year 2021-22, the company's standalone net loss declined to Rs 81.3 m from Rs 256.8 m. The company's revenue from operations grew 160% year on year (YoY) to Rs 2.4 bn from Rs 930 m during same period of last fiscal.

Update: Automotive Stampings & Assemblies' revenue in the June 2022 quarter grew 122.6% (YoY) due to growth in sales across all segments. However, the net profit declined 108% YoY due to higher input costs.

Going forward, its revenue growth will be driven by growth in automotive demand.

For more details about the company, you can have a look at Automotive Stampings' factsheet and quarterly results on our website.

2. Tinplate Company of India

Tinplate Company of India (TCIL) is the largest manufacturer of tinplates in India.

The country's first tinplate manufacturer, TCIL is now over a century young since inception in the year 1920.

It offers tinplate in cut sheet & coil form, and tin free steel (TFS) in sheet form. Tinplate and TFS, the two key product offerings of Tinplate Company, are among the most versatile packaging substrates for packaging processed foods.

The company serves a wide range of industries, including edible oils, paints & pesticides, processed foods, battery & aerosols, and bottle crown producers.

Tinplate Company of India is a subsidiary of Tata Steel, which holds a 74.96% stake.

Being a Tata Group firm, it has access to the research base, technology, and global best practice of Tata Steel Europe.

Also, the company has considerable negotiating power in the Indian domestic market since there are few tinplate manufacturers.

On the financial front, Tata Tinplate has had a string of good quarters in recent months. Adding more comfort for shareholders, the company is almost debt free.

Tinplate's net profit compound annual growth rate (CAGR) remained at 10% for a period of 3-year and 8% for a 5-year period.

Update: The per capita tinplate consumption in India is 0.42 kg as compared to 4.75 kg in China and 9 kg in Malaysia. This shows there is a lot of scope for growth in India.

The company is looking to expand its capacity by 0.3 m tonnes per annum from an existing 0.38 m tonnes per annum to capitalize on the growing demand.

This smallcap Tata group company with a marketcap of Rs 33.7 bn has rallied over 79% in the last 12 months.

To know more, check out Tinplate Company's 2020-21 annual report analysis.

3. Automobile Corporation of Goa

Automobile Corporation of Goa was the first major engineering unit to be set up in Goa. It was jointly promoted in 1980 by Tata Motors, and EDC (formerly known as Economic Development Corporation of Goa, Daman & Diu).

It manufactures sheet metal components, assemblies and bus coaches at its factories. The firm is core supplier of pressings and assemblies to Tata Motors' Pune factory.

As per the latest shareholding data, Tata Motors is the top shareholder of this microcap company. It holds around 48.98% controlling stake in the firm, while the EDC owns 6.66%.

This automobile company has given stellar returns to its investors in the past one year. The stock price rally is supported by the company's constant effort to enter into bus body manufacturing of electric buses.

Update: For the June 2022 quarter, the company reported a revenue growth 255.3% on the back of economic recovery. It also reported a net profit of Rs 83 m against a net loss of Rs 34 m the previous year.

Going forward, its revenue will be driven by growth in volumes with the economy is returning to normalcy.

To know more, check out Automobile Corporation of Goa' latest shareholding pattern.

4. Nelco

Nelco, an IT networking equipment stock from the Tata Group.

It specialises in areas of security and surveillance for defence and civil applications, traction, electronics for locomotives, turnkey projects involving supervisory control and data acquisition system (SCADA), AC and DC drives, real time and embedded software, and network management system with VSAT based networks.

The company caters to some core industries like defence, railways, steel, cement, automobile, oil and gas, paper, ceramics, and services.

Tata Group's power utility firm, Tata Power holds the biggest stake in the company. It owns 48.64% in Nelco.

Just like many other Tata group stocks, shares of Nelco have generated multibagger returns for investors who have held the stock since January 2021.

Shares of Nelco have skyrocketed from Rs 180 to Rs 900 in the last 12 months - up around 400% in this period.

The reason behind this rally is because the Department of Telecommunications (DoT) in May 2021 approved the transfer of the internet service provider licence and VSAT licence from Tatanet Services.

Right now, the company owns a VSAT licence, ISP licence, and inflight and maritime communication licence issued by the DoT. The inflight and maritime communication licence now opens doors for Nelco to operate in the airline and shipping sectors.

The company has also signed an agreement with the Canada-based, global satellite company, Telesat.

Telesat is deploying low-earth-orbit (LEO) satellites with the potential to transform mobile connection in rural and isolated areas. The potential for this technology in Indian villages is enormous. It will significantly increase Nelco's user base.

In a very recent effort, the company bagged a contract for a turnkey project from Oil and Natural Gas Corporation (ONGC) worth more than Rs 400 m.

Update: In the June 2022 quarter, Nelco's revenue and net profit grew by 44.9% YoY and 6.8% YoY respectively. This was mainly due to growth in VSAT and bandwidth segment.

Going forward, it is taking steps to improve operational efficiency by improving responsiveness to its customers.

For more details about the company, you can have a look at Nelco's factsheet and quarterly results on our website.

5. Rallis India

Rallis India, a Tata Group company, has a history of over 150 years. The company is into manufacturing of agrochemicals and is present across the value chain of agriculture inputs - from seeds to organic plant growth nutrients.

Rallis is also in the business of contract manufacturing for global corporations.

The company's stock is under pressure and has declined more than 12% in the last six months.

The delayed and irregular monsoon disappointed and impacted investor sentiment. The September quarter performance was also weak.

However, the stock is again gaining momentum. In the last 30 days, share price of Rallis India has gained 11% on the BSE.

After the recent change in management that resulted in realignment of trade policies and new product introductions, the company has been able to regain lost market share in the domestic market, says a report.

The company's capex plans, focus on product launches, gaining export market share, rising free cash flows (FCFs), expanding return ratios, and a strong balance sheet bodes well for the firm in the coming quarters.

Rallis India, 50.06% owned by Tata Chemicals, is among leading agrochemical companies in India and a preferred partner of global manufacturers.

Update: In the June 2022 quarter, Rallis India's revenue grew by 16% YoY driven by volume and price growth. However, the net profit declined by 18% YoY mainly due to higher input costs.

Going forward, a good monsoon will benefit crop production which will drive the revenue growth in financial year 2023.

Like Rallis, the top fertilizer companies in India will be in limelight for the next few quarters.

To know more, check out Rallis India's 2020-21 annual report analysis.

Tata Group Emerged as the Most Trustworthy Conglomerate Among Investors

Over the last few decades, the most preferred brand among the people of India is Tata group of companies.

Tata has always developed products that are sensitive to the needs of Indian consumers and hence people trust it more than any other competing brands.

It's vital to note that Tata has provided consumers with a service or solution that is both inexpensive and feasible.

Moreover, the group's contribution towards India's EV infrastructure, clean energy, semiconductor assembly business, and its online presence via an all-in-one e-commerce app augurs well for the company in the long run.

In the month of September 2021, Equitymaster's conducted a poll consisting of 17 of the most popular corporate groups in India.

With an overwhelming response from 5,274 participants, we found out that Tata Group is the most trustworthy corporate group.

The group emerged as the undisputed winner of the poll, with 66.3% of the total votes, more than double the number (31.8%) it received in the last poll.

The group has earned the trust of more of our readers in the last eight years on the back of the values by which its companies operate.

It's 153-year-old legacy is a testament to the fact that creating value is not only about the quality of the product or a service but also about the quality of a firm's conduct, both internally and externally.

You can read the entire report here: India's Most Trusted Corporate Group is...

In similar vein, back in August 2021, Co-head of Research Rahul Shah talked about the stellar performance of Tata group companies in the bull market, in one of his videos.

Rahul Shah also compared the performance over a 5-year and a 10-year period.

Tune in to find out more:

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...