Tata Tech Stuns Investors with IPO Price Band at 47% Discount to Unlisted Market Value

Investors in Tata Technologies Ltd were taken by surprise as the company unveiled its initial public offering (IPO) price band, setting it significantly below its unlisted market price. Dealers and market experts have been closely watching the IPO space, given the recent surge in unlisted shares of Tata Tech. The firm has priced its IPO in the range of Rs 475-500 per share, representing a substantial 47.4 percent discount compared to its current trading price in unlisted markets.

Also See: Tata Technologies IPO GMP

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As of now, Tata Technologies’ unlisted shares are trading at an impressive Rs 950 per share. This price reflects a remarkable journey for the company’s stock, which had been valued at approximately Rs 100 per share in June 2020. It skyrocketed to a record high of Rs 1010 per share in July 2023, marking a nearly 1000% gain. Analysts attribute this remarkable surge to expectations surrounding the company’s upcoming listing on public exchanges.

Also Read: Tata Technologies IPO Price Band Set at Rs 475-500 Per Share

Market experts caution that investors who enter the unlisted market without conducting thorough research and rely solely on IPO excitement may encounter challenges. This segment of the market is inherently more unpredictable and risky, requiring patience and a sound investment strategy for successful wealth creation.

Tata Technologies is not the only company to have set an IPO price band significantly lower than the prevailing unlisted market price. Previously, companies like AGS Transact, UTI Asset Management Co Ltd, and PB Fintech had adopted a similar approach. AGS Transact, for instance, listed in January 2022 with a price band of Rs 185-195 per share, while its unlisted shares were trading at Rs 550 apiece before its IPO. UTI AMC, which listed on exchanges in September 2020, had a price band of Rs 552-554 per share, whereas its unlisted market price just prior to the IPO was around Rs 1,100 per share. PB Fintech, the parent company of Paisabazaar, also priced its IPO band at Rs 940-980 per share, even though its unlisted shares were trading at approximately Rs 1,900 apiece just before the IPO.

Also See: Upcoming IPO in India

Tata Technologies, a subsidiary of Tata Motors, is poised to become the first Tata Group company to go public in nearly two decades, with its IPO scheduled for November 22. This marks the group’s first public offering since Tata Consultancy Services (TCS) went public in 2004. The Tata Tech offer-for-sale will conclude on November 24, with the basis of allotment set for November 30 and the credit of equity shares to demat accounts on December 1. The stock is expected to be listed on exchanges on December 4.

At the upper end of the price band, Tata Technologies aims to raise approximately Rs 3,042.51 crore, valuing the company at around Rs 20,283 crore. The offer-for-sale comprises up to 60.85 million shares sold by existing shareholders, including an employee reservation portion of up to 2.03 million shares and a Tata Motors Ltd shareholders reservation portion of up to 6.09 million shares. In the grey market, the stock is currently trading at a premium of Rs 298 per share.

Also See: All IPO GMP Price Today

Tata Technologies Ltd boasts a price-to-earnings (PE) ratio of 32.53x for FY23, which is competitively priced compared to its peers, including L&T Technology Ltd (37.47x), KPIT Technologies Ltd (80.31x), and Tata Elxsi Ltd (61.55x).

In terms of financial performance, Tata Technologies reported an impressive nearly 36 percent year-on-year increase in net profit for the six months ending in September 2023. The net profit for the first half of the year stood at Rs 351.90 crore, compared to Rs 259.06 crore in the same period the previous year. Additionally, revenue surged by 33.8 percent year-on-year to reach Rs 2,526.70 crore, while the EBITDA margin remained robust at 18.39 percent, slightly down from 19.73 percent last year.

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