The shares of Tata Technologies will debut on the exchanges on Thursday, November 30. Ahead of the listing, the company's shares are trading with a premium of ₹375 in the unlisted market.

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Considering the upper price band of ₹500, the stock is likely to debut with a premium of 75%.

The IPO received an overwhelming response from investors with a subscription rate of nearly 70 times at close. The first Tata Group IPO in two decades garnered bids worth ₹1.56 lakh crore for an offer size of just over ₹3,000 crore.

Qualified institutional bidders led the bidding process with a subscription of 203.41 times, followed by non-institutional investors at 62.11 times, and retail investors at 16.5 times.

What analysts say

"Having fetched a subscription of over 69 times, the shares of Tata Technologies are expected to list at around 80% premium over the issue price of ₹500 per share," said Prathamesh Masdekar, Research Analyst at StoxBox. The analyst recommended investors to hold the stock from a long-term perspective, citing the future prospects of the company.

"With increasing spending on Engineering Research & Development (ER&D) globally and Indian Engineering Service Providers (ESPs) being one of the major beneficiaries of such expenses, the company is set to benefit from such a global trend. The increasing demand for autonomous and connected technologies driven by regulatory pressures for safety and cost considerations is expected to provide the necessary tailwinds to the business in the long term," Masdekar said.

Prashanth Tapse, Research Analyst, Sr VP Research at Mehta Equities expects a strong listing gain of over 75% against the issue price of ₹500 per share. There is a high possibility as per Street assumption that Tata Technologies can be a doubler candidate post listing, he said.

"We believe the supper listing premium is justified mainly on the back of TATA parentage tag which enjoys first preference among investors community and its unique well established global business model which is fundamentally strong generating healthy margins in the sector it serves. Given the growth potential in outsourcing, the business model would be in great demand going forward," Tapse said.

Shivani Nyati of Swastika Investmart said the grey market premium (GMP) of Tata Technologies shares is currently ₹320 (82.80%), indicating that the shares could list at around ₹914 per share. "The IPO has received an overwhelming response from investors, oversubscribing by a more than 69 times. Tata Technologies boasts a strong track record of growth and profitability."

"With a P/E (price-earnings) ratio of 18.2 times, the Tata Technologies IPO is priced fairly, reflecting the company's strong fundamentals and promising growth prospects. Given the immense investor interest and the company's robust capabilities, Tata Technologies is poised for a successful listing on the Indian stock exchanges and it will be interesting to witness this listing," Nyati said.

About the offer

To raise ₹3,042.51 crore via its IPO route, Tata Technologies sold its shares in a price band of ₹475-500.

The issue consisted of a 100% offer for sale (OFS) of 6.08 crore equity shares, which means that the company did not receive any proceeds from the IPO.

However, Tata Technologies is a cash-generating company and had cash worth $150 million on its books at the end of the financial year 2023.

Analysts peg the post-issue market cap between ₹19,269 crore and ₹20,283 crore.

Tata Technologies managing director (MD) and chief executive officer (CEO) Warren Kevin Harris said the company is looking at the IPO as a way of legitimising the brand.

"We have done very well as a company over the last four to five years, we are debt-free. We have a healthy cash position on our balance sheet. And so we're looking at the IPO as a way of legitimising the brand and reinforcing trust between ourselves, our customers, and our employees and potential employees in the future. So, we don't need the capital to discharge the plans that we've got in terms of our business plan,” Harris said in an interaction with CNBC-TV18.

Established in 1994, Tata Technologies Limited is a global engineering services company offering product development and digital solutions, including turnkey solutions, to global Original Equipment Manufacturers (OEMs) and their tier 1 suppliers.

It 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 29, 2023 10:49 AM IST