Shares of Tata Investment Corporation rallied more than 15 percent to hit a fresh 52-week high on November 20, extending its stellar rally for the second consecutive day. In the previous session, the stock had surged up to 20 percent. The sharp rally comes ahead of the Tata Technologies IPO, which will open for public subscription on November 22. Tata Technologies is a subsidiary of Tata Motors and Tata Investment Corporation is a promoter group entity of the auto major.
Analysts believe Tata Investment Corporation has an opportunity of value unlocking from Tata Technologies IPO. The news of the public issue has generated a positive outlook for Tata Investment Corporation, contributing to the impressive rise in its share price. Tata Technologies IPO will open on November 22 and end on November 24.
This will be the first IPO from the Tata Group in nearly two decades. Tata Technologies is a pure-play manufacturing focused Engineering Research & Development (ER&D) company, primarily focused on the automotive industry.
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Tata Tech plans to raise Rs 3,042.51 crore from the IPO which is entirely an offer for sale (OFS) of 6.09 crore equity shares by the promoter and investors. Promoter Tata Motors will offload 4.62 crore equity shares worth Rs 2,313.75 crore in the OFS, while investors Alpha TC Holdings Pte Ltd will sell 97.17 lakh shares and Tata Capital Growth Fund I will offload 48.58 lakh shares.
"While Tata Investment holds a modest stake, the Tata Technologies IPO has sparked positive sentiment. The recent appointment of Vaibhav Goyal as the general manager is further fueling optimism. Although the long-term outlook is bullish, short-term investors may consider capitalizing on the current rally for potential exit opportunities," said Santosh Meena, Head of Research, Swastika Investmart Ltd.
At 11:25 am, Tata Investment shares were trading 11 percent higher at Rs 4,353.55 on the National Stock Exchange (NSE). Around 30 lakh Tata Investment shares changed hands on bourses compared to the one-week average of 6 lakh shares. The stock has surged over 104 percent in 2023, its best annual performance since 2009 when it gained over 120 percent. In the last five years, the stock has rallied over 400 percent.
For the fiscal second quarter, the company had reported a net profit of Rs 113.24 crore, registering a rise of 31.38 percent on-year. It clocked in a revenue of Rs 123 crore, up 16 percent YoY. As of September 2023, the promoters hold 73.38 percent stock in the company.
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Technicals show that Tata Investment stock is trading higher than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-, 200-day simple moving averages (SMAs). The counter's 14-day relative strength index (RSI) is at 80 suggesting that it is strongly overbought. The company's stock has a price-to-earnings ratio of 68.84, higher than its sector PE ratio of 26.62. The scrip has a one-year beta of 0.2, indicating low volatility.
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