The Economic Times stated that the GDP of Pakistan has been eclipsed by the total market value of the Tata Group companies.
The report emphasized how the listed businesses of the Salt-to-Software conglomerate have produced outstanding returns on the stock market in just a single year, and it further stated that the total value of these businesses now exceeds the value of Pakistan’s economy, which is still beset by high levels of debt and inflation.
The report states that the market capitalization of the Tata Group is approximately $365 billion, or more than Rs 30 lakh crore. This exceeds Pakistan’s GDP, which the IMF estimates to be $341 billion.
With a market valuation of almost Rs 15 lakh crore, or $170 billion, IT giant TCS is the most valuable of all the listed Tata Group companies. TCS alone is half the size of Pakistan’s cash-strapped, heavily indebted economy, according to IMF estimates.
Although the value of the Tata Group as a whole has increased due to the efforts of all its companies, Tata Motors and Trent have seen the largest increases in value.
In just one year, Tata Motors’ shares have increased by 110%, and Trent’s have increased by an astounding 200%. This is on top of the positive performance of equities in companies like Artson Engineering, TRF, Beneras Hotels, Tata Investment Corporation, Tata Motors, and Automobile Corporation of Goa.
Remarkably, only one of the Tata Group’s at least twenty-five listed companies—Tata Chemicals—has seen a five percent annual decline, as per ACE Equity data cited in the ET story.
However, these are only the conglomerate’s listed businesses. The Tata Group includes a number of unlisted businesses, such as Tata Sons, Tata Capital, Tata Play, Tata Advanced Systems, and Air India.
If these companies are taken into account, the Tata Group’s overall market capitalization would increase significantly. For background, Tata Capital is valued at approximately Rs 2.7 lakh crore on the unlisted market. It is purported that the company intends to initiate its initial public offering (IPO) next year.
While the combined valuation has the firepower to easily make it the largest conglomerate in terms of market capitalisation, it is worth noting that the group is professionally managed, is largely owned by philanthropic trusts and does not have an individual promoter. It may be noted that Ratan Tata owns less than 1 per cent stake in Tata Sons.
Pakistan’s economic crisis
It’s no secret that following a string of failures in FY23, Pakistan has been experiencing the worst economic crisis in recorded history.
With $125 billion in external debt and liabilities, the nation is under pressure to raise the $25 billion in external debt payments that are scheduled to be made starting in July.
To compound its financial difficulties, Pakistan’s $3 billion IMF program is scheduled to expire next month.
Pakistan’s foreign exchange reserves, which are currently at $8 billion, mean that the country can only pay for necessities for two months.
Credit rating agencies are also concerned about the sustainability of interest payments, which could account for half of the government’s revenue this year, given that the country’s debt-to-GDP ratio has risen above 70%.
In sharp contrast, India’s economy, at $3.7 trillion, is approximately 11 times bigger than the size of Pakistan’s economy and is predicted to become the third-largest economy in the world by FY28. As of now, India is the fifth-largest economy in the world.
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