Tata Technologies IPO Day 2: Issue booked 14.85 times, HNI portion subscribed 31.03 times

Tata Technologies IPO opens for second day of bidding

Investors continued to be bullish on the Tata Technologies IPO with 66.87 crore equity shares being bought by the second day of bidding against an offer size of 4.5 crore, leading to an 14.85 times subscription till November 23.

This is the first IPO from the Tata Group in more than 19 years. Tata Consultancy Services, the country's largest IT services company, was the last public issue from the conglomerate in 2004.

The response remained strong from all categories of investors with high net-worth individuals subscribing 31.03 times the allotted quota and retail investors 11.19 times. The reserved portion of qualified institutional buyers was booked 8.55 times.

Employees of Tata Technologies and shareholders of Tata Motors also participated in the offer from day one, buying 2.35 times and 20.02 times the portions set aside for them. Of the total issue, 20.28 lakh shares are reserved for employees and 60.85 lakh shares for shareholders, while excluding both, the offer is the net issue.

Also read: Tata Technologies IPO: A deep dive into its business, risk factors and whether you should invest

The engineering services company that offers product development and digital solutions to global original equipment manufacturers (OEMs) and their tier-1 suppliers has reserved 50 percent of the net issue size for qualified institutional buyers, 15 percent for high net-worth individuals and the remaining 35 percent for retail investors.

The public issue, which closes on November 24, was subscribed 6.54 times on the first day of bidding on November 22.

Pune-based Tata Technologies has fixed the price band at Rs 475-500 per share for the maiden public issue. The Rs 3,042.51-crore IPO is completely an offer-for-sale by promoter Tata Motors, and investors Alpha TC Holdings and Tata Capital Growth Fund 1.

Also read Moneycontrol's Exclusive Note on Tata Technologies IPO

"The Tata Technologies IPO is attractively priced at 33xFY23 P/E and 29x 1HFY24 P/E (on annualized basis) which is at a discount to its peers like Tata Elxsi, KPIT Technologies, L&T Technology Services which trade in 40-65x range," Sneha Poddar is the AVP - Retail Research, Broking and Distribution at Motilal Oswal Financial Services said.

In the anchor book round on November 21, the company mopped up Rs 791 crore from several investors, including Goldman Sachs, Copthall Mauritius Investment, Government Pension Fund Global, BNP Paribas Funds, HSBC Global, ICICI Prudential Mutual Fund, SBI Life Insurance Company, SBI Mutual Fund, DSP Mutual Fund, HDFC Life Insurance and Kotak Mutual Fund.

Also read: Tata Technologies IPO: 10 things to know before subscribing to Rs 3,042 cr issue

It will not receive any money from the public issue and the entire proceeds, excluding IPO expenses, will go to selling shareholders.

Tata Technologies IPO shares maintained the premium of 70 percent over the upper price band, in the grey market, analysts on anonymity said. The grey market is an unofficial platform for trading in IPO shares till the listing.

"This can be a multi-year growth story like Tata Consultancy Services (TCS) and Tata Elxsi," Amit Jain, co-founder of Ashika Global Family Office Services said. He feels the business model for Tata Technologies looks robust and can be a money compounder, keeping a three to five -year view in mind.

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