On 1 January 2019, Tata Sons Pvt. Ltd’s chairman Natarajan Chandrasekaran , in a crisp note to employees, outlined his business strategy: “We are embarking on a process of simplifying, synergising and scaling (3S) to create an agile, powerful platform. We have made significant headway this year in strengthening balance sheets and building healthy cash-flows across the group."

Tata Sons is the principal holding company of the $111 billion Tata group.

This does not seem to be very different from the path Cyrus Mistry took as executive chairman of Tata Sons three years ago. Mistry cut back on heavy capital expenditure and further tried to sweat existing assets. He was attempting to put the Tata House in order through some sacrificial write-offs.

It seems that while the goal was the same, the paths chosen were different. That’s why a day after the appellate tribunal’s order to reinstate Mistry as executive chairman of Tata Sons—countering the acrimonious ouster three years ago—investors in many Tata group stocks seemed unfazed. In fact, many stocks swung up from the knee-jerk reaction on Wednesday.

The consensus on the Street is that day-to-day operations of over a hundred firms in Tata group are unlikely to be greatly affected by the verdict.

“Tata management is known to protect minority shareholders’ interests and, at the individual company level, it would be business as usual with an efficient managerial team," said Manish Sonthalia, head (equities-portfolio management services) at Motilal Oswal Asset Management Co. Ltd.

In the three years of Chandrasekaran’s stewardship, Tata group’s market capitalization rose 38% amid muddled macroeconomic conditions,domestically and globally. Under Mistry, too, investors had gained, as the group’s market cap had soared 75% in four years. However, note that this is not an annualized performance. Besides, economic conditions have changed; hence, this growth is not strictly comparable.

Annual revenue growth in the two years of Chandrasekaran’s leadership has been about 9.9%, with operating profit growing about 7.11%, which is decent for a large conglomerate.

That said, investor sentiment could change if the uncertainty prevails for long. Suspending the order of Mistry’s reinstatement for four weeks gives Tata Sons time to appeal the order before the Supreme Court. But, it could delay board decisions on, say, capital expenditure, fundraising or acquisitions, as it awaits clarity on this bitter battle.

“Some of the decisions taken lately may be kept on hold. But the group’s long-term growth strategy is broadly on the right track. However, as there are some governance issues for now, which have been raised lately, there could be a short-term flux," said a market expert, requesting anonymity. However, for now, investors seem to be focusing on the long-term growth strategy.

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