Tata Technologies IPO opens for subscription. Should you apply?

The much-awaited initial public offer (IPO) of Tata Technologies opened for public subscription on Wednesday. The company bagged about Rs 791 crore in the anchor round ahead of the issue opening.

Some of the marquee funds which participated in the anchor round include Fidelity, HSBC, Goldman Sachs, JM Financial MF, Kotak MF, Axis MF, Motilal Oswal, Edelweiss MF and Mirae Asset among others.

The IPO, which closes on November 24, is the first from the Tata Group since the debut of TCS.


Analysts advise investors to subscribe to the issue over fair pricing, strong brand presence and strong financials.

"At the upper price band, the company is valued at a P/E of 32.5x with a market cap of Rs 20,283 crore post issue of equity shares and return on net worth of 20.8%. On the valuation front, we believe that the company is fairly priced. Thus, we recommend a ‘subscribe for long-term’ rating to the IPO," said Anand Rathi.


The IPO is priced in the range of Rs 475-500, where investors can bid for a minimum of 30 shares in one lot.

At the upper price band, the issue size is Rs 3,042 crore.

The public offer is entirely an offer for sale (OFS) of 6.08 crore shares, under which Tata Motors, Alpha TC Holdings and Tata Capital Growth Fund will participate.

About 50% of the offer is reserved for qualified institutional buyers, 35% for retail investors and 15% for non-institutional investors. In the issue, Tata Technologies has also reserved a 10% quota for Tata Motors' eligible shareholders.

"We believe Tata Technologies is well placed to encash on the growth opportunities in ER&D space and looking at the relatively cheaper valuations, we recommend investors to subscribe to the issue," said SBI Securities.

Tata Technologies is a pure-play manufacturing-focused engineering research and development (ER&D) company, primarily focused on the automotive industry.

They are currently engaged with 7 out of the top 10 automotive ER&D spenders and 5 out of the 10 prominent new energy ER&D spenders in 2022. Its primary services include providing outsourced engineering services and digital transformation services to global manufacturing clients helping them conceive, design, develop and deliver better products.

Some of the key strengths of the company include differentiated capabilities in new-age automotive trends like electric vehicles, deep expertise in the automotive industry, and a global delivery model which enables intimate client engagement and scalability among others.

"Considering the growth opportunities and strong fundamentals of Tata Tech, we recommend a Subscribe rating for this IPO," said Ventura.

For the six months ended September period, the company's total income rose 35% year-on-year to Rs 2,587 crore and net profit was up 36% to Rs 352 crore in the same period.

JM Financial, Citigroup Global Markets India, and BofA Securities India are the book-running lead managers to the IPO and Link Intime India is the registrar.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)