Tata Tech doubles investors' wealth, lists at 140% premium over IPO price

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.

The lucky ones who got allotment in the Tata Tech IPO are laughing all the way to the bank. Tata Technologies made an impressive debut on the bourses on November 30, listing at 140 percent premium to the IPO price. The stock started trading at Rs 1,200 on the NSE and at Rs 1,199.95 on the BSE, while its issue price was Rs 500.

The IPO had garnered heavy interest from all categories of investors, with over 73.38 lakh total applications. The public offer was subscribed 69.43 times, with the quota reserved for qualified institutional buyers (QIBs) getting booked a record 203.41 times.

The portion set aside for non-institutional investors (NIIs) and retail investors was booked 62.11 times and 16.50 times, respectively.

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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.

While demand was robust and the Tata name instilled trust among investors, there were concerns too - the major one being revenue concentration from the top five clients. The top five clients, which include Jaguar Land Rover and Vinfast, contributed 63.9 percent to the topline in FY23 and 57 percent in H1 FY24.

That said, the company's CEO Warren Harris has assured that the contribution of Tata Motors and JLR (Jaguar Land Rover) to Tata Technologies will fall in the medium to long term.

“Let me make it very clear. There is no operational influence that the group or indeed Tata Motors positions on Tata Technologies. And so we are free to target and work with whoever we feel is appropriate in terms of the value that we can deliver,” Harris said.

Tata Technologies is a pure-play manufacturing-focused engineering research and development (ER&D) company, primarily focused on the automotive industry.

Its revenue CAGR over the last three years has far exceeded that of Tata Elxsi, L&T Technologies, and KPIT Technologies. Its EBITDA margin, at 23.7 percent, remains more or less equal to industry standards. With a P/E ratio of 18.2x, the Tata Technologies IPO was priced fairly, said analysts.

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