November 22 is when the eagerly awaited Tata Technologies initial public offering (IPO) will go live. Shares will be priced between Rs. 475 and Rs. 500.
Of all five mainboard IPOs to be announced this week, Tata Technologies, the first offering by the Tata Group in over two decades, garnered the largest premium in the gray market. The Group’s final initial public offering (IPO) was Tata Consultancy Services in 2004.
Under condition of anonymity, analysts stated that the shares of the global engineering services company were available on the grey market for Rs 850 apiece, which represents a 70% premium over the upper price band of Rs 500 per share. They also mentioned that shares of Gandhar Oil Refinery, Flair Writing, and IREDA were quoted at a 21–30% premium, while Fedbank Financial Services was at about an 8% premium over the upper price band.
Experts credited the company’s strong financials, fair values, prospective future growth with a positive industry outlook, and the Tata brand for this substantial premium.
The IPO shares can be purchased and sold on the grey market, an unauthorized marketplace, up until the listing.
Based on fully diluted post-IPO capital paid out and FY23 earnings, the issue is available at a P/E (price-to-ear) of 32.5x on a consolidated basis, with a market capitalization of Rs 20,283 crore, on valuation parse at an upper price range of Rs 500. Meanwhile, rivals with higher valuations include Tata Elxsi (61.55x), L&T Technologies Services (37.5x), and KPIT Technologies (80.3x), all of which the business listed in the draft filings.
“The company is doing well in terms of growth and returns, and the industry forecast is positive. According to Dhananjay Sinha, co-head of equities and head of research for strategy and economics at Systematix Group, “the valuations appear to be cheaper than the comparable listed companies,” he told Moneycontrol.
November 22 is when the eagerly awaited Tata Technologies initial public offering (IPO) will go live. Shares will be priced between Rs. 475 and Rs. 500. It intends to issue more than 6 crore equity shares at the highest price range in order to raise Rs 3,042.51 crore.
The promoter Tata Motors, investors Alpha TC Holdings, and Tata Capital Growth Fund I are making an all-out offer-for-sale (OFS) on the deal. As a result, the public issuance will not bring in any money for the corporation.
Furthermore, Tata Technologies’ pre-IPO placement price of Rs 401.8 was much lower than its IPO pricing of Rs 475–500 per share, demonstrating a strong belief in the company’s market potential and future expansion. According to Wright Research founder and fund manager Sonam Srivastava, this approach increases the company’s valuation from Rs 16,300 crore during the equity sale to a post-issue market capitalization of Rs 20,283 crore.
On October 25, Tata Motors sold TPG Rise Climate SF Pte Ltd 3.65 crore equity shares for Rs 401.81 a share, totaling Rs 1,467 crore.
The company’s remarkable 34 percent revenue growth and 18.6 percent operational profitability, along with the support of investors like TPG Rise The environment SF Pte and Ratan Tata Endowment Foundation, further bolster confidence in its future prospects, Sonam said. “Particularly, despite that premium, Tata Technologies is going into the market about a price-to-earnings ratio that is that is lower than peers like KPIT Technologies, Tata Elxsi, and L&T Technology Services, which could render it an attractive investment.”
She thinks the company with the Tata name behind it could just be able to persuade investors on the valuation front.
Regarding the financials, Tata Technologies has produced strong earnings growth, with sales increasing by 36% and profit increasing by over 60% during the FY21–FY23 period. In addition, throughout that time, its EBITDA margin grew by 240 basis points.