Same Company but Different Outcomes: Portfolio Effects of Tata Motors Equity Share Classes A & B

Equity investors frequently encounter multiple classes of shares issued by the same firm, each differing in voting rights, liquidity, and trading characteristics. While dual-class equity structures have been extensively studied from governance and valuation perspectives, their implications for portfolio construction and risk–return optimisation remain comparatively underexplored, particularly within emerging market settings. This study examines whether the choice between alternative share classes of the same firm materially influences portfolio performance in a multi-asset framework. Focusing on Tata Motors Limited, a major constituent of the Indian equity market, the study compares the portfolio-level effects of its Class A and Class B equity shares. Two three-asset portfolios are constructed: one comprising Tata Motors Class A shares, Axis Bank, and ITC Ltd, and the other replacing Class A shares with Class B shares, while retaining the remaining assets. The portfolios are benchmarked against the NIFTY 500 index over the period from April 2021 to August 2024, using 846 consecutive daily adjusted closing prices. Employing descriptive statistics, correlation analysis, and portfolio performance measures, the study evaluates mean returns, variance, beta, coefficient of variation, and risk-adjusted performance indicators. The empirical findings reveal pronounced differences between the two share classes. Tata Motors Class B shares exhibit higher average returns and greater volatility than Class A shares, along with stronger sensitivity to market movements. Despite this elevated variance, Class B shares demonstrate a lower coefficient of variation, indicating superior risk-adjusted performance. When incorporated into the three-asset portfolio, the Class B-based portfolio delivers higher expected returns and improved Sharpe ratio outcomes, albeit with marginally increased overall risk. The analysis further highlights the stabilising role of ITC Ltd within both portfolios, reflecting its defensive characteristics, while Axis Bank contributes cyclical exposure. Correlation patterns suggest moderate interdependence among assets, enabling meaningful diversification benefits. Overall, portfolio efficiency improves when Class B shares replace Class A shares, underscoring the importance of share-class selection in portfolio design. This study contributes to the literature by extending dual-class equity analysis from firm-level assessment to portfolio-level evaluation, offering evidence from an emerging market context. The findings carry practical implications for portfolio managers and institutional investors, emphasising that share classes of the same firm should not be treated as homogeneous instruments in asset allocation decisions.