Tata Technologies IPO sees grey market premium soar over 80%; bumper listing likely

Oil prices dipped due to renewed demand concerns after China's November Manufacturing PMI at 49.4 and Services PMI at 50.2—both below expectations

Tata Technologies is expected to make a bumper listing on November 30 as the grey market premium (GMP) spiked 83 percent over the IPO price to Rs 415. This implies a listing price of Rs 915 against the IPO price of Rs 500 per share. Analysts are bullish on the Tata Tech stock, expecting good listing gains.

The grey market is an unofficial ecosystem where shares start trading much before the allotment and until the listing day. Most investors track the grey market premium (GMP) to get an idea of the listing price.

Tata Tech being third-biggest in terms of primary issue size in 2023, created a record of attracting the highest number of applications (73.58 lakh) on its issue. The Tata Group company broke the record of 73.38 lakh applications of LIC of India, the country’s biggest-ever IPO after Paytm. The public issue of Tata Motors' subsidiary garnered bids worth over Rs 1.56 lakh crore.

“Considering overwhelming subscription demand and investor-friendly pricing, Tata Technologies could see a strong listing gain of over 75% against the issue price of Rs 500 per share. There is a high possibility that Tata Technologies can be a doubler candidate post listing,” said Prashanth Tapse, research analyst and senior vice-president for research at Mehta Equities.

Tata Tech's public offer was subscribed 69.43 times, with the quota reserved for qualified institutional buyers (QIBs) getting booked by a record 203.41 times, taking the second spot just after Newteb Technologies which was subscribed 220.69 times this year. The portion set aside for non-institutional investors (NIIs) and retail investors was booked 62.11 times and 16.50 times, respectively.

“With a P/E ratio of 18.2x, 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,” said Shivani Nyati, Head of Wealth, Swastika Investmart.

The issue was entirely an offer-for-sale (OFS) of 6.08 crore shares by the promoter Tata Motors, and investors Alpha TC Holdings and Tata Capital Growth Fund 1. The price band of the Rs 3,042.52 crore issue was fixed at Rs 475-500 per share.

Backed by Tata Motors, Tata Tech is a pure-play manufacturing-focused ER&D (engineering, research and development) company, primarily focused on the automotive industry. It is engaged with seven out of the top 10 automotive ER&D spenders and five out of the 10 prominent new energy ER&D spenders.