After almost two decades, Tata Group is preparing for its new initial public offering (IPO). On June 27, Tata Group received permission from the Securities and Exchange Board (SEBI) for the IPO of Tata Technologies. However, the IPO prices are yet to be officially announced by the organisation.
Industry experts believe that the shares will likely be issued at around Rs 268 apiece. Interestingly, the shares are already generating interest in the grey market, where they are available at a premium cost of Rs 100.
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This IPO will mark Tata Group’s first public offering since 2004, following Natarajan Chandrasekaran’s appointment as the chairperson of Tata Sons. The Grey Market Premium (GMP) has surged from Rs 84 to Rs 100 within just one week.
On the day of SEBI’s approval for the IPO, the GMP rates were Rs 76. By last Saturday, July 29, the rates had risen to Rs 84 and since Sunday, July 20, they have climbed further to Rs 100.
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Rajesh Sinha, Senior Research Analyst at Bonanza Portfolio, pointed out that Tata Technologies reported a trailing twelve months (TTM) revenue of ₹3,983 crore and TTM net profit of ₹513 crore, resulting in a TTM EPS of ₹12.65. For comparison, he suggested looking at Cyient, a company in a similar business, with a TTM revenue of ₹6,016 crore and currently trading at 23.5x TTM EPS of ₹46.52.
On March 9, 2023, Tata Technologies filed its Draft Red Herring Prospectus (DRHP) with SEBI for the IPO. According to the company’s plan, they will sell 9.571 crore shares. The IPO will be an offer for sale for its existing shareholders, including Alpha TC Holdings Private Limited, Tata Motors and Tata Capital Growth Fund. Alpha TC Holdings Private Limited holds a 7.26 per cent stake, while Tata Motors holds a 74.69 per cent stake in the company.
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In the public issue, the shares will be sold through an Offer for Sale (OFS). Tata Motors plans to sell 8,11,33,706 equity shares, Alpha TC Holdings PVT LTD will sell 97,16,853 equity shares and Tata Capital Growth Fund will sell 48,58,425 equity shares through OFS.
As per reports, Tata Group is expected to take one to one and a half months for the entire process, including finalising the price levels. After that, the company will announce the potential date for launching the IPO and experts suggest that it will likely be by the end of August or mid-September 2023.
