Tata Technologies IPO: Short Or Long Term, What's The Best Bet For Investors?

Tata Technologies IPO is the mega public offer of this week and it has already grabbed huge demand across investors categories. Tata Tech's issue is special because it would be the first Tata Group-backed IPO in 19 years. In less than an hour of its opening on November 22nd, the IPO was already fully subscribed before ending on a robust note. It is evident that traders are excited and optimistic for this new Tata IPO and are hoping for impressive gains upon listing. But what what's the best bet for traders for holding Tata Technologies shares? Short-term or long-term?

Prashanth Tapse, Research Analyst, Sr VP Research, Mehta Equities believes that the ata Tech IPO offer gives investors an opportunity to invest in a leading global engineering services company with deep expertise in the automation industry focused in Engineering Research & Development ("ER&D").

He said, "We like the company's strong established brand and diverse product portfolio across different product categories from traditional OEM's to new age energy vehicles like EV."

Adding he said, "We think outsourcing business model would be in great demand going forward in engineering services and digital transformation services to global manufacturing clients helping clients to conceive, design, develop and deliver better products."

By looking at the financials historically, Tata Tech has delivered a strong revenue and margin growth in the last 3 years and expect the growth would remain similar going forward, Tapse pointed out.

On the valuation, Tapse said, "at upper price band of Rs 500/- and based on annualized earnings and fully diluted post-IPO paid-up capital, the issue is asking for a Market Cap of Rs 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. Considering all the parameters, we strongly advocate a good long term prospects for the company. Hence, we recommend investors to "SUBSCRIBE" to the Tata Tech IPO offer with long-term perspective as well as strong listing gain due to investor friendly pricing given good room for upside."

On Day 1, as per NSE's data, Tata Tech IPO recorded cumulative bids of 29,43,78,780 equity shares, oversubscribing 6.54 times the initial offered size of 4,50,29,207 equity shares.

Non-institutional investors (NII) aka HNIs portion oversubscribed by a huge 11.69 times, while Retail Individual Investors (RIIs) portion subscribed by 5.42x. Also, a reserved portion for employees and Tata Motors shareholders logged subscriptions of 1.10x and 9.30x respectively. Lastly, the qualified institutional buyers (QIBs) portion also subscribed by 4.08x.

The IPO will be available for bidding till November 24th. The price band for the IPO is fixed at Rs 475 to Rs 500 per share having a face value of Rs 2 each. The bid lot size is 30 Equity Shares and in multiples thereof.

Companies like JM Financial, Citigroup Global Markets India and BoFA Securities are acting as the book-running lead managers of the IPO. While Link Intime India is the registrar of the issue.

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.