Tata Technologies IPO breaks all records, issue subscribed 69x

• The QIB portion of the IPO was subscribed 200 times over on the last day.
• In the last three days, Tata Tech’s grey market premiums went up to 78% from 70%.

Tata Technologies initial public offer (IPO) was subscribed 69 times the shares on offer on the last day — with outsized interest from qualified institutional buyers (QIBs). The ₹3,042 crore issue from the House of Tatas has attracted a record number of applications.

The QIB portion of the issue was subscribed 200 times over the shares on offer. In comparison, non-institutional and retail investors’ interest paled in comparison as these quotas were subscribed 62 times and 16 times respectively.

The issue, which was backed by most market gurus and brokerages, also saw its grey market premiums climb up from 70% to 78% in the last three days. It’s expected to make its debut on the bourses next week.

It also raised ₹791 crore from 67 anchor investors at the upper price band of ₹500 per equity share; before opening the issue for public. Top foreign investors like Fidelity Funds, Government Pension Fund Global and Goldman Sachs and Indian mutual funds like Aditya Birla MF, Nippon MF, Sundaram MF and more bought into the issue.

Source: BSE

Investor-friendly pricing, say analysts

The issue marks the debut of a Tata group company in the stock markets after a gap of 19 years, after TCS listed in 2004. The issue which opened today closes on November 24, and has fixed a price band of ₹475-500. Investors can bid for a minimum of 30 shares and in multiples thereof.

The engineering research and development (eR&D) company is a subsidiary of Tata Motors, which is its promoter as well as an anchor client along with Jaguar Land Rover. Its expertise goes beyond automotive where it has skills, and caters to all manufacturing clients. It’s keen on the aviation and the EV sector too.

This market of global outsourced ER&D market was estimated to be around $105-110 billion in 2022. Most analysts are undeterred by the fact that it’s a complete offer for sale, as they believe investors are keen on taking part in a high-quality growth business.

“At upper price band of ₹500 and based on annualised earnings and fully diluted post-IPO paid-up capital, the issue is asking for a market cap of ₹20,283 crore with P/E of 29x on consolidated basis, which seems the issue is reasonably priced when compared industry peers which are trading 60x. Despite 100% OFS offer investors are keen to own the share based on group legacy,” said Prashanth Tapse, Sr VP of research at Mehta Equities.

IDBI Capital too said that the company has good earnings growth potential. “With the gradual recovery in the global economy, rising manufacturing capex and shift in manufacturing from US/Europe/China to India due to cost inflation and China+1 strategy, we are expecting strong in the TTECH’s financial performance in the coming years,” said a report by Ventura.

The grey market too is expecting 70% listing gains from its debut.