Today is Tata Technologies IPO opening: Tata Technologies is offering its shares for ₹475–500 in an IPO to raise 3,042.51 crore. Based on the patterns observed in the grey market, the issue may launch at a premium of approximately 70% on stock exchanges.
On Wednesday, November 22, subscriptions for Tata Technologies’ initial public offering (IPO), the company’s first public offering in nearly two decades, began. On November 24, the three-day stake sale will come to an end.
Through the anchor book, Tata Technologies has already collected ₹791 crore from 67 investors, including Goldman Sachs and SBI Mutual Fund.
Tata Technologies is offering its shares for ₹475–500 in an IPO to raise 3,042.51 crores. In a single lot and its multiples, bidders may place a minimum bid of thirty equity shares.
Based on the patterns observed in the grey market, the Tata Tech IPO may launch at a premium of approximately 70% on stock exchanges.
The IPO shares can be purchased and sold on the grey market, an unofficial marketplace, until the listing. To estimate the potential listing price of any public offer, most investors typically rely on some assistance from the black market.
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Tata Technologies IPO – Is it better to apply or not?
Analysts are still upbeat about the Tata Tech IPO and advise investing in it because it appears to be fairly priced in comparison to its peers and offers investors a favorable risk-reward ratio.
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The business can handle new trends with its unique capabilities and in-depth knowledge of the automotive sector. It is a well-known brand with seasoned marketers. According to Shivani Nyati, Head of Wealth at Swastika Investmart, the company has also demonstrated significant financial growth in previous performances.
Nyati did point out that there might be some worries, just like with any other business, such as reliance on a small number of very important customers and outside vendors, the risk associated with doing business internationally, and industry competition.
“Well, investors have a fantastic opportunity as the IPO is coming at a very attractive valuation of 32.5 times. For listing gain as well as long-term benefits, one should therefore apply for this IPO, the analyst advised.
Sharekhan:
“The Tata Group is launching an initial public offering (IPO) following a nearly two-decade hiatus. The IPO appears to be fairly priced in comparison to its peers and presents a favorable risk-reward for investors. The brokerage firm stated in a note that “Tata Technologies’ future outlook is promising given its established capabilities in ER&D services, proven track record, and focus on adjacencies of aerospace and transport and construction heavy machinery.”
SBI Securities: Subscribe
“Tata Technologies is trading at 32.5 times the FY23 P/E (price-earnings) multiple at the upper price band of ₹500. With an FY23 P/E multiple of 108.9 times for KPIT, 68.5 times for Tata Elxsi, and 40.1 times for LTTS, its peers are trading at a comparatively high valuation, according to SBI Securities.
IDBI Capital: Subscribe
Over the course of FY21–FY23, the company’s revenue and profit after taxes increased at a CAGR of 36% and 62%, respectively. Revenue and profit after taxes grew by 34% and 36%, respectively, in the first half of fiscal 2024, and the brokerage anticipates continued strong earnings growth.
With a ‘Subscribe’ tag on the issue, it stated, “It is valued at 33 times FY23 earnings per share (EPS) versus a peer average of 63 times FY23 EPS.”
Sushil Finance: Subscribe
Analysts at Sushil Finance with a “Subscribe” rating suggested that investors consider long-term investments in this technological behemoth while taking into account both favorable and unfavorable factors.
The brokerage thinks Tata Technologies is in a good position to take advantage of the expansion prospects in the ER&D sector and considering the comparatively lower valuations, it advises potential investors to “Subscribe” to the offering.
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Tata Technologies IPO – About the OFS issue
Tata Motors will offload 4.62 crore shares, Alpha TC Holdings will sell 97.1 lakh shares, and Tata Capital Growth Fund will sell 48 lakh shares as part of the IPO, which is a 100% offer for sale (OFS) of 6.08 crore equity shares.
Since this is an OFS issue, the selling shareholders will be entitled to all of the offer’s proceeds. The number of equity shares in the IPO has been reduced from 9.57 crore to 6.08 crore.
The post-issue market capitalization is estimated by analysts to be in the range of ₹19,269 crore to ₹20,283 crore.
10% is set aside by the Tata Group company for eligible shareholders of Tata Motors. Additionally, qualified institutional bidders will receive roughly 50% of the issue, non-institutional investors will receive 15%, and retail investors will receive the remaining 35%.
The business announced last month that it was selling TPG Rise Climate a 9.9% share of the Dalal Street-based business for ₹1,613.7 crore. As a result, Tata Technologies was given an equity valuation of ₹16,300 crore.
Read More about Tata Technologies IPO, GMP, Review, Price, Details.
Tata Technologies IPO – Key strengths:
- Broad knowledge of the automotive sector.
- Distinctive qualities in the connected, autonomous, and electric car (EV) trends of the modern era.
- A marquee clientele that includes traditional OEMs, new energy vehicle manufacturers, and anchor accounts.
- Scalability and close client engagement are made possible by a global delivery model.
- Reputable brand with a skilled management group, board of directors, and promoter.
Tata Technologies IPO – Key concerns:
- This offer consists of only an offer for sale.
- – Its income is largely reliant on a clientele that is concentrated in the automotive industry. Additionally, the company’s top 5 clients account for a large portion of its revenue.
- The management group and highly qualified engineers are essential to the company.
- The pricing of engineering services could be impacted by fierce competition in the market.
Overview of the company
Tata Technologies Limited was established in 1994 and is regarded as a top global engineering services provider, providing turnkey solutions and product development to Original Equipment Manufacturers (OEMs) and their tier-1 suppliers worldwide.
The business serves clients in related industries like aerospace, transportation, and construction heavy machinery by utilizing its extensive domain knowledge in the automotive sector.
Financially speaking, during FY21–23, the company’s total income increased at a compound annual growth rate (CAGR) of 36.16%, and in the first half of FY24 (H1FY24), it increased by roughly 33.84%. For FY23 and H1FY24, the company’s EBITDA margin was 18.6% and 18.39%, respectively. In FY23 and H1FY24, the profit after-tax margin was 14.14% and 13.93%, respectively.
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