Tata Technologies IPO is now open for subscription
The much-anticipated Tata Technologies IPO is now open for subscription in the pre-apply mode, marking one of the season’s most-awaited public offers. Pre-apply mode for an IPO allows investors to apply for the offer in advance, ahead of its live bidding on the opening day.
Scheduled to open for subscription on November 22, Wednesday, and conclude on November 24, this IPO marks Tata Group’s first initial public offering in 20 years. Notably, this IPO signifies Tata Group’s return to the IPO market after an absence of nearly two decades. The offering primarily adopts an Offer for Sale (OFS) model, allowing investors to bid for a minimum of 30 shares and in multiples of 30 shares thereafter.
Approaching the IPO date, the grey market has demonstrated resilience, valuing Tata Technologies shares at a premium of Rs 350, showing a slight decrease from the previous week’s GMP of Rs 370 per share. Despite this decline, market observers regard the Grey Market Premium (GMP) favorably, given its proximity to around 70 percent of the IPO price band.
However, experts caution against solely relying on GMP, as it is speculative and lacks a connection to the fundamental aspects of the company, making it an unreliable factor for investment decisions. Analysts have observed a remarkable increase in Tata Technologies IPO Grey Market Premium (GMP), despite the subdued sentiments prevailing on Dalal Street.
Over the course of two days, the Tata Technologies IPO GMP surged from approximately ₹240 to ₹375, indicating strong investor interest ahead of the public issue opening on November 22, 2023. However, financial analysts caution against giving significant weight to Grey Market Premium (GMP), emphasizing its speculative nature and lack of regulatory oversight.
They stress that the grey market premium doesn’t necessarily reflect the company’s financials. Additionally, they note that the GMP can be artificially inflated, particularly when individuals with significant stakes in the upcoming IPO are involved. Investors are advised to conduct thorough due diligence on the company’s balance sheet before making investment decisions in the primary market.
Atul Parakh, CEO at Bigul, expressed his views on the Tata Technologies IPO, stating, “TATA Technologies will be the IPO to watch for in the upcoming week, highly anticipated by everyone. With a face value of ₹2 and favorable valuation compared to its peers like KPITTECH and TATAELXI, backed by TATA and solid financials, the IPO has garnered significant investor interest, indicating potential substantial listing gains and contributing to heightened retail interest in the stock.”
A Bonanza portfolio expert mentioned that the Tata Technologies IPO has been launched at an attractive valuation compared to peers like Tata Elxsi, KPIT Technologies, L&T Technology Services, etc. The Tata Group has set the IPO price band for its company at Rs 475 to Rs 500 per share.
The IPO consists of an offer for sale (OFS) of up to 60,850,278 shares, involving major stakeholders such as Tata Motors Ltd, Alpha TC Holdings, and Tata Capital Growth Fund I. Anand Rathi, a brokerage firm, foresees a potential improvement in Tata Technologies’ EBITDA margins beyond the current 18-19 percent, citing offshoring and utilization strategies.
The firm also points out Tata Investment Corporation’s stock performance, showcasing robust technical indicators and the possibility of profit booking in forthcoming sessions. The stock’s low volatility, indicated by a one-year beta of 0.2, contributes to its market stability. With the IPO subscription period nearing, market observers anticipate a robust response from investors.
The IPO pricing of Tata Technologies, strategic partnerships, and the company’s emphasis on key industry verticals contribute to a positive outlook. Nevertheless, investors are advised to conduct a comprehensive analysis of the company’s balance sheet to gain a deeper understanding of its fundamentals before making investment decisions.
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