The initial public offering (IPO) of Tata Technologies continued to attract strong demand on second day (Day 2) of the bidding process. The ₹3,042.51-crore issue was subscribed nearly 15 times so far. The issue closes on Friday (November 24). Tata Technologies is the first IPO from the Tata Group to have hit the primary markets in nearly 20 years.

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The issue received bids for 66.71 crore shares today against the issue size of 4.50 crore shares, as per data from the exchanges at around 5 pm. The quota for non-institutional investor (NIIs) was booked the most at 30.94 times, retail investors' category fetched 11.16 times of the total bids. The portion reserved for employees was subscribed 2.35 times and qualified institutional buyers saw 4.12 times subscription.

Tata Technologies had also reserved a 10% quota within the IPO for existing shareholders of Tata Motors. That portion has been subscribed 19.97 times as of 5 pm.

The company is selling its shares in the range of ₹475-500 apiece. The IPO is entirely a offer for sale (OFS) of 6.08 crore equity shares and investors can make a bid of a minimum of 30 equity shares and its multiples thereafter.

Tata Motors will offload 4.62 crore shares, Alpha TC Holdings will sell 97.1 lakh shares and Tata Capital Growth Fund will sell 48 lakh shares. The selling shareholders will be entitled to receive the entire proceeds from the offer as it is an OFS issue.

Analysts have pegged the post issue market cap to be between ₹19,269 crore and ₹20,283 crore.

Analysts have given a 'Subscribe' rating to the IPO with a long-term view, citing its strong financials and growth outlook. "By looking at the financials historically, Tata Tech has delivered a strong revenue and margin growth in the last three years and expect the growth would remain similar going forward," said Prashanth Tapse of Mehta Equities.

Analysts at SBI Securities believe Tata Technologies is well placed to encash on the growth opportunities in ER&D space and looking at the relatively cheaper valuations, the brokerage recommends investors to 'Subscribe' to the public offer.

However, Shivani Nyati of Swastika Investmart noted that there might be some concerns, like any other business, like dependence on a few top clients and third-party vendors, risk related to foreign exposure, and a competitive industry.

Tata Tech shares are in high demand in the grey market, commanding a premium of nearly 80% over the issue price. The stock is trading at a premium of ₹395 as against its issue price of ₹500.

If the grey market trends are anything to go by, the stock might double investors' wealth on listing day itself.

It is important to note that grey market premiums are just an indicator of how the company's shares are stacked up in the unlisted market and are subject to change rapidly.

Last month, the company had announced the sale of a 9.9% stake in the Dalal Street-bound company to TPG Rise Climate for ₹1,613.7 crore. This ascribed an equity valuation of ₹16,300 crore for Tata Technologies.

Tata Technologies Limited is claimed to be a leading global engineering services company offering product development and digital solutions, including turnkey solutions, to global Original Equipment Manufacturers (OEMs) and their tier 1 suppliers.

The company has deep domain expertise in the automotive industry and leverages this expertise to serve clients in adjacent industries, such as Aerospace and Transportation and Construction Heavy Machinery.

First Published:Nov 23, 2023 11:45 AM IST