Shares of Tata Steel were trading at Rs.415.50, down Rs.10.70 or 2.51 per cent during the opening trades

Shares of Tata Group companies have been impacted by the boardroom developments that seem well on their way to becoming a courtroom battle.

On Tuesday — a day after the board of Tata Sons removed Cyrus Mistry from the chairman’s post — shares of all the listed entities from the Tata Group fell in the range of 1-4 per cent each with the exception of Tata Teleservices that managed to buck the trend and gain ground.

The fall in shares of Tata-owned companies was much higher than the marginal decline of 0.31 per cent, or 87.66 points, in the benchmark Sensex that closed at 28,091.42.

Worst-hit

The worst-hit was Indian Hotels, which lost 3.16 per cent, or Rs.4.10, to close at Rs.125.65.

Incidentally, Mr. Mistry initiated the sale of some of the loss-making international properties of the company, which was being viewed positively by market participants.

Shares of Indian Hotels had more than doubled from Rs.63 to Rs.129.75 in the time that Mr. Mistry was at the helm.

Shares of Tata Sponge Iron also fell 3.04 per cent to Rs.618.15. The Odisha-based entity also saw its share price more than double between December 2012 and October 2016.

Leading Indian brokerage Edelweiss was of the view that Mr. Mistry had taken significant steps towards deleveraging and better utilisation of capital over the past few years and that his absence may impact the future strategy of the conglomerate.

Profitability focus

“We believe that over the short-term the markets may see a knee-jerk reaction to this development but the group will readjust due to availability of abundant leadership at group firms,” it said. The manner in which the new chairman targets profitability will be the key area to watch out for, the brokerage added. Sector heavyweight Tata Steel also lost 2.51 per cent, or Rs.10.70, to Rs.415.50. Shares of the metal major remained largely flat during Mr. Mistry’s tenure as he looked to sell the company’s U.K. assets, which it had acquired amid much fanfare in 2007 for about $13 billion.

Shares of other large entities from the Tata Group such as TCS and Tata Motors also lost more than one per cent each as investors await more clarity on the boardroom developments.

While both camps have been mum on the reasons for the sudden ouster of Mr. Mistry, market participants said that some of the steps that had been taken in the last four years had been positive for profitability.

Primary among those was Mr. Mistry’s focus on sale of assets that were either not profitable or were creating little shareholder value, said Edelweiss.