Tata Technologies, the subsidiary of Tata Motors, is poised to finalize the basis of allotment for its initial public offering (IPO) shares by November 28. The company garnered significant interest from diverse categories of investors, witnessing an impressive subscription rate of 69.4 times during the period of November 22-24. Investors enthusiastically purchased 312.65 crore equity shares against the offer size of 4.5 crore shares, amounting to bids totaling Rs 1.56 lakh crore in just three days.
Qualified institutional buyers and high net-worth individuals demonstrated notable enthusiasm, subscribing 203.41 times and 62.11 times their allotted quotas, respectively. Meanwhile, retail investors, Tata Technologies’ employees, and Tata Motors’ shareholders subscribed 16.50 times, 3.7 times, and 29.2 times, respectively. This marked the first IPO by the Tata Group in over 19 years.
The public issue successfully raised Rs 3,042.51 crore at Rs 500 per share, the upper price band. The IPO, constituting only an offer-for-sale by promoter Tata Motors and investors Alpha TC Holdings and Tata Capital Growth Fund I, was priced in the range of Rs 475-500 per share.
Investors keen on checking the share allotment status can conveniently do so on the BSE website or the IPO registrar portal (Link Intime India) through three simple steps. The equity shares are anticipated to be credited to successful investors’ demat accounts by November 29, with trading expected to commence on both BSE and NSE from November 30, though these dates are subject to change.
In the grey market, Tata Technologies’ IPO shares have garnered a robust response, evidenced by a 10 percent increase in premium in recent sessions. As of the time of writing, shares were available at an 80 percent premium over the issue price of Rs 500 per share. The grey market, an unofficial platform for buying and selling IPO shares until listing, often provides insights into expected listing prices, though it does not delve into the company’s fundamentals.
The substantial interest in the Tata Group firm can be attributed to factors such as strong parentage, healthy financials, attractive valuations, and anticipated growth potential in the engineering services sector. Tata Technologies’ shares were evaluated at a price-to-earnings ratio of 32.5x based on FY23 financials, presenting a favorable comparison to peers such as KPIT Technologies (105.6x), L&T Technology Services (41.2x), and Tata Elxsi (69.6x).
On the financial front, the Pune-based company, specializing in product development and digital solutions, reported commendable performance with a revenue growth CAGR of 36 percent during FY21-FY23, led by the services segment. Profit after tax and EBITDA witnessed robust growth at a CAGR of 62 percent during the same period, supported by strong operating leverage. Additionally, the company demonstrated impressive margin performance, with the EBITDA margin expanding by 240 basis points and the profit margin by 410 basis points during FY21-FY23.