Tata group companies should be top stock picks for fund managers, says N Chandrasekaran

Tata Sons chairman N Chandrasekaran wants that fund managers should pick Tata group companies first before considering any other companies. For this, he has asked the CEOs of group companies to reduce their dependence on funding from the parent, strengthen their balance sheets, and build bigger projects.

Chandrasekaran, who took over as the chairman of the conglomerate on February 21, believes that while lesser dependence on funding from parent company and stronger balance sheets will help fund managers take individual credit calls, bigger projects will lure more investors.

These changes were mentioned at a meeting of group CEOs in early April, and were yet to come out to the world.

As per TV Narendran, MD of Tata Steel India, Chandrasekaran wants group companies to become leaders in their respective industries.

"He wants that each Tata company should be part of the investment portfolio of investors.... Let's say Tata steel.... Tata steel should be the preferred stock for anybody investing in steel stocks. You have to be a relevant part of anyone investing in the sector," Narendran told ET.

Chandrasekaran wants leading group companies to follow the lead of Tata Consultancy Services (TCS) and become as popular among fund managers as it is.

He also said that in order to get support from Tata Sons, companies will have to be 'deserving' enough, coming up with a better return on capital.