Tata Technologies IPO: Strong GMP Ahead Of Rs 3,042 Crore Public Offer; 3 Reason Why To Subscribe!

Tata Technologies is the mega IPO of Tata Group that everyone has been waiting for quite a few months now. But the wait is over, and Tata Tech's public offer will finally open on November 22. Ahead of the IPO, the company's grey market premium (GMP) has already shot up rapidly, indicating a robust listing ahead. Tata Tech IPO will be listed on stock exchanges BSE and NSE.

On Saturday, as per InvestorGain report, Tata Technologies IPO's last GMP was Rs 342, last updated Nov 18th 2023 04:32 PM. With a price band of 500.00, Tata Technologies IPO's estimated listing price is Rs 842 (cap price + today's GMP). The expected percentage gain/loss per share is 68.40%.

Tata Tech will launch its IPO on November 22nd for the public and will be available till November 24th. Bidding for anchor investors will be allowed on November 21st.

Tata Tech fixed the price band for the IPO at the lower range of Rs 475 to Rs 500. On the price band, the IPO size comes to around Rs 2,890-3,042.51 crore.

The IPO is entirely offered for sale (OFS) of up to 60,850,278 equity shares. Of the total IPO size, 46,275,000 equity shares will be offloaded by Tata Motors, 9,716,853 shares by Alpha TC Holdings, and 4,858,425 equity shares by Tata Capital Growth Fund I.

Also, from the total IPO size, 50% of the shares will be reserved for qualified institutional buyers (QIBs), while 15% to be kept for non-institutional investors, and 35% to be allocated to retail individual investors (RIIs). Additionally, 10% of the offer for subscription by eligible shareholders of TML, i.e., Individuals and HUFs who are the public equity shareholders (including shareholders holding Ordinary Shares and 'A' Ordinary Shares in TML and excluding such persons who are not eligible to invest in the Offer under applicable laws, rules.

Tata Technologies IPO will be the first in 20 years. The last time Tata Group launched an IPO was of their flagship giant Tata Consultancy Services (TCS) which went public in 2004.

Here's why to subscribe the IPO:

In its IPO note, IDBI Capital said, Tata Technologies Limited range of services includes IT Consultancy, SAP
implementation, CAD/CAM engineering & design consultancy. It generates ~80% from services, 11% from products and 9% from Education as of FY23. Vertical-wise the company generates the majority of revenues from automotive (which is seeing healthy traction led by disruption). Apart from automotive, it will be a key beneficiary of tailwinds in aerospace led by capacity expansion plans of aircraft manufacturers and MRO activities.

Further, the brokerage added, "Its revenue and PAT has grown at a CAGR of 36% & 62% over FY21-FY23. H1FY24 has seen 34% & 36% YoY revenue & PAT growth and we expect robust earnings growth going forward. It is valued at ~33x FY23 EPS vs peer average of ~63x FY23 EPS. Hence, we recommend SUBSCRIBE."

IDBI Capital has explained three investment rationales for Tata Tech IPO. These are:

1. Deep expertise in the automotive industry - The company has comprehensive portfolio of services for the automotive industry that addresses the entire automotive value chain from concept design to vehicle launch. It also offers turnkey full vehicle development solutions for traditional internal combustion engine-powered vehicles, plug-in hybrids and battery electric vehicles which have been developed over a period of 10 years.

2. Robust strategy and healthy margin expansion - The company's strategy of increasing wallet share, adding new logos in priority verticals & geographies, improving mining, investing in software & embedded electronics and e-learning platform will drive growth. The company has also expanded net margins (~388 bps over FY21-H1FY24) led by offshoring, pyramid, automation and operational efficiency.

3. Balance mix of growth - The combination of anchor clients, traditional OEMs and new energy vehicle companies provides a balanced mix of stability and growth.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.