Why never buy a Tata Company

I remember being asked after I had completed a valuation of Tata Motors a few years ago whether I would buy its stock and shocking my audience by saying that I would never buy a Tata company for my portfolio.

When pushed for my rationale, I said that buying a family group company is like getting married and having your entire set of in-laws move into the bedroom with you;

in investment terms, if I invest in Tata Motors, I will (unwillingly) also be investing in many other Tata Group companies, because about 30-40% of the value of Tata Motors comes from its holdings in other Tata companies.

wrote Aswath Damodaran,Professor of Finance,New York University

7 replies on “Why never buy a Tata Company”

Like the idea of “entire set of in-laws move into the bedroom with you”.
Ha ha. Life in India is complicated as well in the corporate world also.

Well, there are two counter-arguments to this:
1. Why not? In-law does not necessarily mean FIL and MIL, but perhaps also the saalis. And Indians anyway celebrate the Saali aadhi Gharwali ethos!
2. As another Investment Guru said, never marry your stock. So…..if one is not marrying the stock, what’s the harm in having over the family over for a few years? When you throw out the spouse, the in-laws go out too!
But seriously, this seems to be a mental block on the part of the great Ashwath. As long as the promoters are not crooked, cross holding is a deterrent one can cautiously ignore.

Titan , one of the largest wealth creators of the decade , is from Tata group.

Rahul Sonawane

views will keep coming and people continue to create wealth…ignore noise and focus what seems best to an individual

if we apply same cross-holdings logic to Mahindra, Godrej, Ambani, Murugappa, Shriram, Piramal, etc there will be hardly any stocks available for investment

Wasnt he the one who saw Bitcoin as a currency alternative? That went well.For all their faults Tata sons have far more integrity than many non-family run companies

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