Tata Technologies IPO Garners Over 80% Grey Market Premium, Anticipates Bumper Listing

Tata Technologies IPO Garners Over 80% Grey Market Premium, Anticipates Bumper Listing

Tata Technologies IPO: Tata Technologies, a subsidiary of Tata Motors, made an impressive market debut today, listing at a substantial 140% premium to its issue price of Rs 500. The Rs 3,042.51-crore IPO, the first from the Tata Group in nearly two decades, is being hailed as the best listing since November 2021 for an IPO exceeding Rs 500 crore.

The stock opened at Rs 1,200 on the NSE and Rs 1199.95 on the BSE, soaring to Rs 1,334 on the BSE within minutes, marking an extraordinary 168% increase from its IPO price. The scrip eventually settled at Rs 1,314.25 apiece.

Analysts recommend investors book 50% profits over Rs 1,400, given Tata Technologies’ healthy subscription numbers, strong parentage under Tata Motors, robust financial performance, and promising growth potential in the engineering services industry.

Prashanth Tapse, Research Analyst and Sr VP Research at Mehta Equities, highlighted, “Given the growth potential in outsourcing, the business model would be in great demand going forward. We recommend allotted investors to book 50% profits over and above Rs 1,400 and retain the rest of the holding for long-term considering healthy long-term returns post-listing.”

Shivani Nyati of Swastika Investmart views the listing as a positive development for both Tata Technologies and the engineering services sector, advising IPO participants to consider holding onto their shares for sustained growth.

Saurabh Jain, Vice Presidentโ€”Research at SMC Global Securities, anticipates strong demand, stating, “Even if Tata Technologies IPO listing takes place around Rs 850 to Rs 900 apiece levels, I won’t be surprised if Tata Technologies share price touches Rs 1,000 or a four-digit figure on Tata Technologies IPO listing date.”

The IPO garnered bids worth over Rs 1.5 lakh crore, with an overall subscription of nearly 70 times the shares on offer. Qualified institutional buyers led the bidding, subscribing 203.41 times, while retail individual investors subscribed 16 times, and non-institutional investors subscribed 62.11 times.

Tata Technologies, a pure-play manufacturing-focused engineering research and development (ER&D) company, posted a 36% CAGR in revenue and a 62% CAGR in profit after tax from FY21 to FY23. The first half of FY24 witnessed a 34% and 36% YoY growth in revenue and PAT. Analysts project robust earnings growth moving forward.

Despite being a 100% offer for sale (OFS) without proceeds for the company, Tata Technologies is a cash-generating entity with $150 million in cash at the end of FY23. Analysts estimate the post-issue market cap between Rs 19,269 crore and Rs 20,283 crore.

At an upper band valuation of Rs 500, the issue is priced at a PE ratio of 32.5 times based on FY23 EPS, outpacing competitors such as Tata Elxsi, L&T Technologies, and KPIT Technologies in revenue CAGR over the last three years.

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