Tata Technologies IPO Day 2: Issue Oversubscribed 8.30 Times; Retail Investors Show Strong Interest

Mumbai, November 23, 2023 – The Tata Technologies IPO continued to witness overwhelming investor interest on its second day of bidding, with the issue being subscribed 8.30 times as of November 23. This surge in demand comes as a testament to the confidence investors have in the Pune-based engineering services company.

Also See: IPO Subscription Status Live Today

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The Rs 3,042.51-crore initial public offering (IPO), which is entirely an offer-for-sale by promoter Tata Motors, as well as investors Alpha TC Holdings and Tata Capital Growth Fund 1, saw a total of 32.44 crore equity shares being purchased by investors, surpassing the available 4.5 crore shares.

Notably, this IPO marks a significant milestone for the Tata Group, as it is their first public issue in more than 19 years. The last IPO from the conglomerate was Tata Consultancy Services (TCS) in 2004.

Also Read: Moneycontrol Interviews Amit Jain: Tata Technologies IPO’s Potential as a Multi-Year Growth Story

Investor enthusiasm was palpable across all categories, with high net-worth individuals subscribing 12.24 times their allocated quota and retail investors showing robust interest at 6.37 times. Even the reserved portion for qualified institutional buyers was booked four times over.

Employees of Tata Technologies and shareholders of Tata Motors also actively participated in the offering from day one, with 1.35 times and 10.55 times oversubscription in their respective segments. Excluding these reserved portions, the net issue size stood as per the original offering.

Also See: Tata Technologies IPO GMP

Tata Technologies has allocated 50 percent of the net issue size for qualified institutional buyers, 15 percent for high net-worth individuals, and the remaining 35 percent for retail investors.

The IPO, which is set to close on November 24, got off to a strong start on November 22, with a subscription of 6.54 times on the first day of bidding.

Tata Technologies has priced its shares in the range of Rs 475-500 per share for the maiden public issue. The IPO is solely an offer-for-sale by the promoters and existing investors.

Also Read: Tata Technologies IPO Strengths and Risks

Sneha Poddar, AVP – Retail Research, Broking, and Distribution at Motilal Oswal Financial Services, commented, “The Tata Technologies IPO is attractively priced at 33 times FY23 P/E and 29 times 1HFY24 P/E (on an annualized basis), which is at a discount to its peers like Tata Elxsi, KPIT Technologies, L&T Technology Services, which trade in the 40-65x range.”

In the anchor book round on November 21, the company successfully raised Rs 791 crore from prominent investors, including Goldman Sachs, Copthall Mauritius Investment, Government Pension Fund Global, BNP Paribas Funds, HSBC Global, ICICI Prudential Mutual Fund, SBI Life Insurance Company, SBI Mutual Fund, DSP Mutual Fund, HDFC Life Insurance, and Kotak Mutual Fund.

Also Read: How to Apply for Tata Technologies IPO on Groww, Zerodha, and Upstox

It’s important to note that Tata Technologies will not receive any funds from the public issue, as the entire proceeds, excluding IPO expenses, will go to the selling shareholders.

In the grey market, Tata Technologies IPO shares have been trading at a premium of 70 percent over the upper price band, according to analysts who preferred to remain anonymous. The grey market serves as an unofficial platform for trading in IPO shares until their official listing.

Also Read: Tata Technologies IPO Valuations Attract Investor Interest

Amit Jain, co-founder of Ashika Global Family Office Services, expressed optimism about the future of Tata Technologies, stating, “This can be a multi-year growth story like Tata Consultancy Services (TCS) and Tata Elxsi.” He believes that Tata Technologies’ robust business model has the potential to be a long-term wealth creator, emphasizing a three to five-year investment horizon.

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