Tata Technologies IPO is solely an Offer-for-Sale (OFS) comprising 6.08 crore shares by the promoter Tata Motors and investors Alpha TC Holdings and Tata Capital Growth Fund 1. There is no fresh issue component in this IPO.
The Tata Technologies IPO lived up to expectations, proving to be a resounding success for the Tata Group. The Rs 3,042.51-crore offer garnered an impressive 49.91 times subscription. Bids were submitted for 224.75 crore equity shares against an issue size of 4.5 crore on November 24, the final day of bidding.
The inaugural public issue from the Tata Group since the Tata Consultancy Services IPO in 2004 witnessed robust demand, achieving full subscription within the initial hours of opening. The debut day concluded with 6.54 times oversubscription, and by Day 2, the subscription reached 14.85 times.
On the final day of bidding (Day 3), qualified institutional buyers and high net-worth individuals (non-institutional investors), with reservations of 50 percent and 15 percent in the net issue, demonstrated substantial interest by subscribing 126.85 times and 56.70 times their allotted portions, respectively.
Retail investors, Tata Technologies employees, and Tata Motors shareholders exhibited notable enthusiasm in the offer. They subscribed 15.44 times, 3.39 times, and 27.81 times the portions allocated for them, respectively. These allocations constitute 35 percent of the net issue, with 20.28 lakh shares reserved for retail investors and 60.85 lakh shares set aside for Tata Motors shareholders. This robust response from various investor categories underscores the widespread interest and confidence in the Tata Technologies IPO.
The public offer, excluding the employees and shareholders’ quota, represents the net issue. Opened on November 22, the offer features a price band set at Rs 475-500 per share.
This offering comprises solely an Offer-for-Sale (OFS) of 6.08 crore shares by the promoter Tata Motors, along with investors Alpha TC Holdings and Tata Capital Growth Fund 1. Notably, there is no fresh issue component, meaning that the entire issue proceeds, excluding IPO expenses, will be directed to the selling shareholders.
Despite being entirely OFS, the IPO garnered significant attention due to factors such as appealing valuations, strong parentage, robust financials, and expectations of substantial demand in the engineering services sector. These factors collectively contributed to keeping the issue in the spotlight.
The countdown for the Tata Technologies IPO has begun, prompting investors to consider whether to subscribe to the Rs 3,042-crore issue.
Prominent investors, including Goldman Sachs, BNP Paribas Funds, HSBC Global, Government Pension Fund Global, Florida Retirement System, Oaktree Emerging Markets Equity Fund, Copthall Mauritius Investment, Franklin Templeton Mutual Fund, SBI Mutual Fund, ICICI Prudential Mutual Fund, SBI Life Insurance Company, Kotak Mutual Fund, Mirae Asset Mutual Fund, and Sundaram Mutual Fund, participated in the anchor book, raising Rs 791 crore for the company.
Prashanth Tapse, Senior VP (Research) at Mehta Equities, expressed confidence in the company’s strong brand and diverse product portfolio, spanning traditional OEMs to new-age energy vehicles. He highlighted the outsourcing business model’s anticipated demand in engineering services and digital transformation services for global manufacturing clients.
At the IPO price of Rs 500 per share, Tata Technologies is valued at a trailing twelve months P/E of 28.3x. Ventura Securities expects robust financial performance in the coming years, driven by the gradual recovery in the global economy, increasing manufacturing capex, and a shift in manufacturing from the US/Europe/China to India.
Established in 1994, Tata Technologies, backed by Tata Motors, focuses on product development and digital solutions for global OEMs and their tier 1 suppliers. The company has exhibited impressive profit growth at a CAGR of 61 percent and revenue at 36 percent during FY21-FY23, with strong EBITDA and net margin.
Tata Technologies IPO shares are trading at an 80 percent premium over the upper price band in the grey market, indicating significant investor interest. Analysts suggest that investors often use the grey market premium to estimate the expected listing price of an IPO.
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