Tata Technologies Limited, a subsidiary of automotive giant Tata Motors, has sent shockwaves through the financial landscape with its recent Initial Public Offering (IPO). The three-day bidding process, which concluded on November 24, witnessed an overwhelming response from investors, marking a historic milestone for the Tata Group – their first IPO in nearly two decades.
Unprecedented Subscription Numbers
The IPO, with an issue size of ₹3,042.51 crore, garnered tremendous interest, subscribing over 69.4 times on the final day. The public issue received an astonishing 3,12,64,69,230 equity share bids against the 4.50 crore shares offered. Such overwhelming demand not only highlights investor confidence in Tata Technologies but also underscores the broader market’s appetite for quality offerings.
Breaking down the subscription numbers further, retail investors showed substantial interest with a subscription rate of 16.50 times, while Non-Institutional Investors (NII) demonstrated robust enthusiasm at 62.11 times. The real showstopper was the Qualified Institutional Buyers (QIB) portion, reaching an astronomical 203.41 times subscription. Even the employee and shareholder portions exhibited strong demand, being subscribed 3.70 times and 29.19 times, respectively.
The buzz surrounding Tata Technologies’
The buzz surrounding Tata Technologies’ IPO is not only due to its exceptional subscription figures but also because it marks a significant event for the Tata Group. This IPO, which opened on November 22, is the conglomerate’s first foray into the market in nearly two decades, showcasing their commitment to innovation, growth, and engaging with public markets.
Grey Market Premium Soars
Adding to the fervor, the Grey Market Premium (GMP) for Tata Technologies IPO saw a substantial surge, reaching ₹405 per share. This represents an impressive 81% premium over the issue price of ₹500 per share. Market observers suggest that this premium indicates a strong investor belief in the company’s potential and bodes well for its performance post-listing.
If the current GMP is any indication, Tata Technologies shares are expected to debut on the stock exchanges at ₹905 apiece on December 5, creating further anticipation and excitement among market participants.
Financial Health and Growth Prospects
Beyond the subscription numbers and market premiums, Tata Technologies’ financial performance adds another layer to its compelling narrative. Over the fiscal years 2020-2023, the company experienced a robust sales growth of 15.7%, reaching ₹4,414 crore in FY23. Notably, EBIT margins improved from 13% in FY20 to an impressive 16.5% in FY23, reflecting the company’s operational efficiency and financial discipline.
According to insights from brokerage firm Nirmal Bang, Tata Technologies plans to leverage its IPO proceeds to strengthen relationships with existing clients, target new high-potential accounts with significant annual ER&D spends, and tap into the burgeoning market of new energy vehicle companies. This strategic approach is anticipated to drive further growth for the company.
Valuation and Investor Considerations
At the upper price band of ₹500, Tata Technologies is offered at an annualized H1FY24 PE of 28.8x. The improvement in Return on Equity (ROE) and Return on Capital Employed (ROCE), standing at 20.9% and 24.3%, respectively, for FY23, adds a favorable dimension to the valuation.
However, investors are advised to tread cautiously and conduct thorough due diligence. The IPO allotment is expected to be finalized on November 30, and investors should seek advice from certified experts before making any investment decisions.
Looking Ahead
As Tata Technologies gears up for its stock market debut on December 5, all eyes will be on how the company performs in the post-listing scenario. The overwhelming response to its IPO sets the stage for a potentially blockbuster entry into the stock exchanges, marking a new chapter in the Tata Group’s legacy.
In conclusion, Tata Technologies’ IPO has not only captured the attention of the financial community but has also become a symbol of renewed investor confidence and optimism in the Indian market. The coming weeks will undoubtedly unfold more chapters in this intriguing financial saga, as investors eagerly await the listing day to witness the stock’s journey in the public domain.
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