Tata Technologies IPO Worth Rs 3,042 Cr Commences With 140 % Premium On Stock Exchanges, Ranks Among Top 10 Highest Listed IPOs
The Tata Technologies IPO, the largest in terms of capital raised and a landmark IPO for the Tata Group after two decades, debuted with an enormous premium of 140 per cent at Rs 1200. The issue was initially available at Rs 500 and received nearly 70 times subscription.
Moreover, the stocks surged and extended its premium listing gains, trading 160 per cent higher at Rs 1300. The stock has gained Rs 800 versus its Rs 500 issue price.
The IPO of this engineering and product development digital services provider received significant interest from investors, with bids coming in for 312.42 crore equity shares worth Rs 1,56,211.7 crore at the upper price band against an issue size of 4.5 crore equity shares on the final day of bidding.
Retail investors, Tata Technologies employees, and Tata Motors shareholders all responded aggressively to the offer, subscribing 16.42 times, 3.67 times, and 29.12 times to the portion set aside for them, which was 35 per cent of the net issue, 20.28 lakh shares, and 60.85 lakh shares reserved in the issue, respectively.
The group issued its first IPO of Tata Consultancy in 2004, which was completely subscribed within the first few hours of its release, with the debut day ending with 6.54 times purchase and Day 2 ending with 14.85 times subscription.
“Tata Technologies is a long-term play. At the current market price of Rs. 1,337, the stock is trading at a price-to-earnings (P/E) multiple of 75.6 times, which seems to be in line with peers. Thus, short-term investors are advised to book profits, while long-term investors can remain invested. Long-only investors can consider investment at this level,” said Rajnath Yadav, Research Analyst, Choice Broking.
The issue consisted exclusively of an offer-for-sale (OFS) of 6.08 crore shares by the promoter Tata Motors and investors Alpha TC Holdings and Tata Capital Growth Fund 1. Tata Motors sold an 11.4 per cent stake, private equity company Alpha TC Holdings sold a 2.4 per cent stake, while Tata Capital Growth Fund offloaded a 1.2 per cent stake.
Despite being an entire OFS issue, it remained in the spotlight for various reasons, including attractive valuations, good parentage, sound financials, and forecasts of high demand in the engineering services area.
“The overwhelming response to the IPO was evident in its staggering oversubscription of 69.43 times. This robust investor interest reflects the company's strong fundamentals and promising growth prospects and, of course, the legacy of the Tata group. The listing is a positive development for the company and the engineering services sector. Investors who participated in the IPO should consider holding onto their shares for the long term, as the company is well-positioned for sustained growth,” said Shivani Nyati, Head of Wealth, Swastika Investmart.
Post-listing, the stake of Promoters holding in the firm has been diluted to 55.39 per cent compared to 66.79 per cent prior to the IPO.
BoFA Securities, Citigroup Global Markets India, and JM Financial were the book running lead managers, whereas Link Intime India was the registrar to the issue.
Tata Technologies, founded in 1994, serves as a global engineering services firm and provides product development as well as digital solutions. Turnkey solutions are provided to global original equipment manufacturers (OEMs) and their tier-1 suppliers.
Tata Technologies has served in various sectors such as aircraft, transportation, and heavy construction machines due to their domain understanding of the automotive industry.
