Many companies in India are working in various sectors and industries, and their performances are commendable. But, it is truly tough to name any group like the Tata and the Adani Group. Famous and renowned names as these are, they are trusted by almost every investor.
Gautam Adani, recently became the richest person in the world, his worth rose almost 20 times in a short span of time, and this was in news not only because its an Indian who is on the top, but also because he had surpassed already established names like the Ambanis and Tata of course.
Among so many companies, we all know a lot has been happening with these two groups specifically, and one can admit it is tough to keep track. This article has got all the details for you to check out. We will discuss the history, fundamentals, future plans and the stocks these companies have in the market. Let’s begin!
History and Holdings
Tata was established by Jamsetji Tata in 1868 as a trading entity. Their products can be seen in computers, kitchens, and roads everywhere. Their operations are in the chemical sector, software, steel, and automobile sector among the top and to name a few. The group has businesses in more than 100 countries and 6 continents. Its size can be known by the fact that its revenue accounted for 4% of India’s GDP in 2018. The group’s combined revenue for the year 2022 was almost $ 129 Billion.
Sixty-six per cent of the equity share capital of Tata Sons is held by philanthropic trusts, which support various causes like education, health and art and culture. The Mistrys hold 18.4% of the stake in the company.
At present, Natarajan Chandrasekaran is the Chairman of Tata Sons. The Padma Bhushan awardee joined the Board in 2016 and was given chairmanship in January 2017, this was after his 30 years of service to the group. Other important position holders are Venu Srinivasan and Ajay Piramal who are the directors among others.
Gautam Adani founded Adani Enterprises Ltd in 1988 and had interests in various industries. The industries the group operates in are mining, power, cement, renewable energy and airports.
Adani does not have as strong a presence in the IT sector as Tata does, however, it does has its own expertise in ports.
Since getting listed in 1994. The company’s share prices have grown at 37% CAGR. At present, Gautam Adani is the Chairman of the group and other important positions in different companies of the group are held by his family members.
The group has one of the top companies in India with the strongest fundamentals. Despite this, the companies of the group are currently facing huge losses due to various events that took place with the group and the controversies.
Investors and financial analysts are interested in assessing a company’s fundamentals to compare its financial standing in relation to other companies in the same industry, to the overall market, or to itself over time.
In order to determine if a company’s shares are over, under, or appropriately priced in the market, fundamental analysis entails delving deeply into its financial statements to determine its profit and growth potential, relative riskiness, and ultimate decision-making capacity.
Knowing the importance, we will now take a look at the fundamentals of both groups.
The management of the Tata Group is among the most effective, efficient and strong in India. Tata is undoubtedly the most well-managed group of companies in India. The management has been seen working genuinely towards the interest of the shareholders over the years. The Tata Group is not only loyal to its shareholders but also to its employees. Rarely do we see an unsatisfied employee from this group of companies.
Along with knowing their values, they also know the market requirements and update and polish their policies accordingly to keep up with the new developments happening. They have been showing active participation in the Electric-Vehicle and AI and Machine Learning segment which is a positive sign.
They are also well aware that generating profits and building products is not the only motive for their business. Since all their companies are in different sectors and different industries, they have their own goals and aims to achieve as per their industry standards.
We will take a brief look at the top company of the group that is TCS.
- The Debt to Equity ratio of the company has been 0, which is a good sign, given the company is able to employ its existing funds in productive segments and research and development of AI and its software.
- The PE ratio of the company currently stands at 36.09 and is among the highest in comparison to its peers. A high PE is not very attractive to any investor and signifies an overvalued stock, which gives less than a perfect opportunity for investment.
- A current ratio of 2 is considered to be perfect, and the company is seen trying to improve its numbers in this segment. In March 2019, the current ratio stood at 4.17 and at the end of March 2022, the current ratio was 2.56 which is a good sign again.
- The return on capital employed is 52.91% for the year ending March 2022, and this figure comes from 39% in March 2018, which is again a massive increase.
- The annual growth in the revenue of the company has been slow, but the good news is that there is no sign of a fall.
The profits and revenue in the past years are as follows –
|Annual||Mar 2022||Mar 2021||Mar 2020||Mar 2019||Mar 2018|
The group as a whole has been in the news for quite some time now and not for good reasons. Even if someone doesn’t have much activity on the internet and news, they do know that something is going on with the group and which isn’t the best. These events will be discussed just after we see the financials of their top company, Adani Green Energy Ltd.
- The Revenue figures of the company have been increasing since March 2018. The net profits of the company, have been improving too and have shown a much better relative growth as compared to its peers. The following table gives us an idea of the same –
|Annual||Mar 2022||Mar 2021||Mar 2020||Mar 2019||Mar 2018|
- The Price to Earning ratio of the company is 794.48, which is indicating that the stock is very expensive. Along with this, the company also has a very low dividend yield of just 0.06%, one of the lowest among its peers.
- The return on capital employed by the company was 6.57%, which is again among the highest when compared to its peers.
Now, take a look at what happened with the group.
The study team at Hidenburg has levelled numerous charges against the Adani Group. These allegations include several financial irregularities, possible fraud, and incorrect pricing. The research group’s report’s brief summary is as follows-
- The group takes benefit of its offshore networks to manipulate its earnings.
- The group is accused of controlling 38 shell companies in tax haven countries, which are operated by Vinod Adani.
- Further, the Adanis have been the subject of four significant government investigations of what is thought to be a possible fraud.
- The Adani Group also has two of its companies, Adani Enterprises and Adani Total Gas being audited by a small and inexperienced firm.
- The report also highlights that a significant amount of its offshore funds, reportedly located in Mauritius, own shares in the Adani Group worth Rs 36,000 crores. These funds are not being independently managed and have common owners.
- The report also states that there are funds that work towards circuitous trading and manipulation of the Adani Group stocks.
These accusations against the group have significantly affected the group’s image and its stock performance overnight. While some investors are still affirmative and positive about the stocks’ future, many have already taken their money out of the stocks trusting the reports.
Also Check: Adani Power Vs Tata Power
Along with the present, it is equally essential to have knowledge of what the company plans to do in the future. What projects and ideas it has for the future in order to have an idea of its performance and accordingly judge the company. So, now that we know the fundamental details and numbers about the company, we shall take a look at the future plans these groups have for their companies –
- The Tata Group recently bought the loss-making airlines Air India and Air India Express. In accordance with the company’s announcement, Air India and Vistara Airlines will be merged by the year ending 2024. Similar plans are to be executed with Air India Express, which shall be merged with AirAsia by the end of 2023.
- In the previous year, BigBasket and 1mg both were bought by the group. These acquisitions boosted the e-commerce presence of the group, which is essential in the present scenario. The group also joined the market for telecom equipment through the acquisition of Tejas Networks.
- In April 2022, the Tata Neu app was released. An application called Tata Neu enables customers to buy any goods or services provided by the Tata Group companies.
- And, to not stay behind the AI race, along with providing software to the AI companies, they have also created IoT platforms like TCS Connected Universe, and cognitive automation platform ignio.
- For an astounding Rs. 80,000 crores, Adani purchased the world’s largest cement producers, ACC and Ambuja Cements.
- The group plans to make at least 5 companies in a span of 3 to 4 years in an attempt to improve their debt ratios and widen the investment horizon and potential of the company operations.
- It was also recently disclosed that the group has budgeted $70 billion in the renewable energy sector, including green hydrogen, solar, wind, and hybrid.
- Adani has teamed with Flipkart as a key partner in the e-commerce and technology space. For example, the two businesses have partnered to develop logistical and data centre capabilities. Moreover, the Adani group invested in Cleartrip, a platform for trip aggregation that is a part of the Flipkart organisation.
The following table shows the companies of Tata Group that the group has –
|Company||Market Share (Rs Cr)|
|Tata Consultancy Services||1,230,000|
|Tata Consumer Products||68,000|
|The Tata Power Company||68,000|
|The Indian Hotels Company||43,000|
|Tata Teleservices (Maharashtra)||15,500|
|Tata Investment Corporation||11,000|
|Tata Steel Long Products||3,200|
The following table shows the companies of Adani Group that the group has-
|Company||Market Share (Rs Cr)|
|Adani Green Energy||194,000|
|Adani Total Gas||232,000|
|Adani Ports and Special Economic Zones||132,000|
|New Delhi Television||1,600|
Final Thoughts on Tata Group vs Adani Group
The Tata Group is old in the game, experienced and has a trustworthy image in the market, while on the other hand, Adani is not much old, but has made its name known to people worldwide within a short period of time. Tatas’s presence and steps in the upcoming industries of AI and Electric Vehicle segments are its biggest positive and will definitely attract more investments and praise.
On the other hand, the accusations against the Adani Group have made the group tumble down like a small stone from the top of a mountain. The validity of these accusations has been denied by the conglomerate. The SEBI has been working in the direction of finding the facts and the work is still in progress.
For us, as individuals, at this point, all we can conclude is that Tata is definitely in a better position when compared to Adani. This in no way implies that Adani is not worth investing in, but the final verdict depends on what the final thoughts of SEBI are. Till then, the race between these two groups continues to prove itself as the best.