TATA Technologies IPO Price Band at Rs 475-500, Priced at a 47% Discount to Unlisted Market

TATA Technologies IPO Price Band

TATA Technologies Ltd has created a stir among investors by setting its Initial Public Offering (IPO) price band significantly below its unlisted market price, causing a wave of surprise in the market. By fixing TATA Technologies IPO price band at Rs 475-500 per share, company represented a substantial 47.4% discount from its current unlisted market price. This strategic move has captivated market attention, especially considering the rising Grey Market Premium (GMP) ahead of the IPO’s opening on November 22, with the subscription period concluding on November 24.

TATA IPO Lot Size

TATA Technologies’ IPO is eagerly anticipated, and its price band has been established at ₹475-500 per share, with a lot size of 30 equity shares and multiples thereof. What has raised eyebrows is the bold decision to set the price below its unlisted market value, a move seldom seen in the IPO landscape.

TATA IPO Pricing Strategy

As of now, the unlisted market for TATA Technologies is witnessing high demand, leading to a substantial Grey Market Premium (GMP) increase to ₹298. GMP, while a key indicator of market sentiment, is subject to rapid changes. Currently, the stock trades at Rs 950 per share in the unlisted market, showcasing an impressive journey from Rs 100 per share in June 2020 to its peak at Rs 1010 per share in July 2023. Analysts attribute this surge to the market’s anticipation of the upcoming IPO listing.

TATA Technologies IPO Structure and Participants

TATA Technologies IPO, a landmark move for the Tata Group after nearly two decades, is an Offer-for-Sale (OFS) of 6.08 crore equity shares with a face value of ₹2 each. The OFS includes Tata Motors offloading 4.62 crore shares, Alpha TC Holdings selling 97.1 lakh shares, and Tata Capital Growth Fund selling 48 lakh shares.

Crucially, as it’s an OFS issue, the proceeds from the IPO will go entirely to the selling shareholders, and the company will not receive any IPO proceeds. Within the offering, Tata Technologies has reserved a 10% quota for eligible shareholders of Tata Motors. Institutional investors have a 50% allocation, while retail and non-institutional investors have 35% and 15%, respectively.

At the upper end of the price band, the IPO size is estimated at ₹2,890-3,042 crore, with Axis Capital projecting a post-issue market cap between ₹19,269 crore and ₹20,283 crore.

TATA IPO Strategic Partnerships and Investor Interest

Tata Technologies is actively engaging with prominent entities like Morgan Stanley, Blackrock, and several US hedge funds for potential investments in its IPO at a valuation of $2.5 billion, as reported by Reuters. This reflects a global interest in the company’s growth prospects.

TATA IPO Date, Timeline and Key Financial Movements

The IPO process began with TATA Technologies filing its papers with SEBI in March, receiving approval in June. The issue size has since been adjusted from the initial 9.57 crore shares to the current 6.08 crore equity shares. In a notable move last month, the company announced the sale of a 9.9% stake to TPG Rise Climate for ₹1,613.7 crore.

The basis of allotment is expected on November 30, and the credit of equity shares to demat accounts will occur on December 1. The company’s equity shares will be listed on both BSE and NSE on December 4.

TATA Technologies IPO: Key Concerns and Risk Factors

TATA Technologies, in its prospectus, has highlighted key risk factors that investors should be aware of. These include client concentration, with a substantial portion of revenue derived from the top five clients. Additionally, the company faces exposure to currency fluctuations, with nearly three-quarters of its revenue coming from currencies like the US Dollar, British Pound, Yuan, Euro, Singapore Dollar, and the Swedish Krona.

TATA Technologies Ltd: Company Profile and Financial Performance

TATA Technologies is a global engineering services company specializing in product development and digital solutions for global Original Equipment Manufacturers (OEMs) and their tier-I suppliers. With over 9,300 employees and captive clients such as JLR and Tata Motors, the company reported an outstanding 46% revenue growth for the financial year 2022, marking its strongest performance to date.

For the first nine months of the current financial year, TATA Technologies has sustained double-digit growth in both revenue and net profit compared to the same period last year. The operating margin has also seen a substantial expansion of nearly 300 basis points to 19.2%.

Conclusion

In conclusion, the TATA Technologies IPO presents a unique scenario with its pricing strategy, garnering attention from investors and industry analysts alike. As the subscription window approaches, all eyes will be on how this unconventional move unfolds in the dynamic landscape of initial public offerings.

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TATA Technologies IPO Price Band at Rs 475-500, Priced at a 47% Discount to Unlisted Market – GMP Surges Ahead of Offering!

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