Tata Technologies IPO subscribed 6.54 times on day 1, HNI portion booked 11.69 times

Tata Technologies IPO opens for subscription today

Tata Technologies’ Rs 3,042.51-crore IPO, the first public issue in over 20 years from the Tata Group, opened for subscription on November 22. The offer has been subscribed 6.54 times, with investors buying 29.43 crore equity shares against an offer size of 4.5 crore.

Retail investors had bid 5.42 times their quota of shares, while the portion set aside for high-networth individuals (HNIs) was subscribed 11.69 times and qualified institutional buyers (QIB) bid 4.08 times, the subscription data available with the exchanges showed.

The part set aside for employees of Tata Technologies was booked 1.1 times, while that of Tata Motors' shareholders was booked 9.3 times.

The Pune-based global engineering services company has reserved 20.28 lakh shares for its employees and 60.85 lakh for the shareholders of Tata Motors, the promoter. The IPO excluding the reserved portion of employees and shareholders is the net issue.

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Half of the net issue is set aside for qualified institutional buyers, 15 percent for HNIs and the remaining 35 percent for retail investors.

The issue is purely an offer-for-sale (OFS) by promoter Tata Motors and investors Alpha TC Holdings and Tata Capital Growth Fund 1.

Also read: Tata Technologies IPO: 10 things to know before subscribing the issue

The price band for the offer, which closes on November 24, has been fixed at Rs 475-500 a share.

The company that offers product development and digital solutions to global original equipment manufacturers (OEMs) and their tier-1 suppliers, raised Rs 791 crore via anchor book on November 21.

Marquee names like Copthall Mauritius Investment, Goldman Sachs, BNP Paribas Funds, Government Pension Fund Global, HSBC Global, Oaktree Emerging Markets, SBI Mutual Fund, ICICI Prudential Mutual Fund, SBI Life Insurance Company, Kotak Mutual Fund, DSP Mutual Fund, HDFC Life Insurance and Bajaj Allianz Life Insurance Company invested in the anchor book.

Also read: Tata Technologies IPO anchor round: Mutual funds that invested and those skipped

Grey market premium

The IPO shares were in strong demand in the grey market, trading at 70 percent premium over the upper price band given the healthy performance in the past years, strong industry growth potential and the Tata brand, analysts said on condition of anonymity.

The grey market is an unofficial market where IPO shares can be bought and sold till the listing day. Investors typically track the grey market premium to get an idea of listing price.

Most brokerages have given thumbs up to the issue, citing valuations comfort, healthy business prospects, strong parentage and superior financials.

At the upper price band of Rs 500, the stock is valued at PE multiple of 32.53 of its FY23 diluted EPS, and a market capitalisation of over Rs 20,000 crore.

Also read: Fedbank Financial Services IPO | Company receives Rs 325 crore from anchor investors

Tata Technologies’ expertise in the automotive industry, marquee set of clients across anchor accounts, traditional OEMs and new energy vehicle companies ensure a positive outlook for the future, said Asit C Mehta, which advised subscribing to the issue from a medium to long-term perspective.

As a subsidiary of Tata Motors, the company benefits from long-term relationships with both the parent company and JLR which strengthens to tap the large opportunity in automotive ER&D markets, adjacent verticals to tap the wide business network, it said.

Also read: Flair Writing Industries IPO | Anchor investors buy shares worth Rs 178 crore ahead of issue opening

"Considering the healthy business prospects, strong parentage, superior financials with improvement in margins and ratios provides a valuation comfort. Therefore we recommend a subscribe to the issue," Reliance Securities said.

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