Investors who secured allocations in the Tata Tech IPO are enjoying significant gains, as the company made an impressive stock market debut on November 30. Listing at a substantial 140 percent premium to the IPO price, Tata Technologies commenced trading at Rs 1,200 on the NSE and Rs 1,199.95 on the BSE, compared to its issue price of Rs 500.
The IPO garnered substantial interest from diverse investor categories, receiving over 73.38 lakh total applications. The public offer witnessed an exceptional subscription rate of 69.43 times, with the qualified institutional buyers (QIBs) category being oversubscribed a record 203.41 times. Non-institutional investors (NIIs) and retail investors subscribed 62.11 times and 16.50 times, respectively.
The Rs 3,042.52 crore issue comprised a complete offer-for-sale (OFS) of 6.08 crore shares by promoters Tata Motors, along with investors Alpha TC Holdings and Tata Capital Growth Fund 1. The price band for the issue was set at Rs 475-500 per share.
Despite strong demand and the credibility associated with the Tata brand, concerns were raised, particularly regarding revenue concentration from the top five clients, contributing 63.9 percent to the topline in FY23 and 57 percent in H1 FY24. Tata Technologies’ CEO, Warren Harris, has addressed these concerns, emphasizing a decrease in the contribution of Tata Motors and Jaguar Land Rover in the medium to long term.
Tata Technologies, a specialized manufacturing-focused engineering research and development (ER&D) company, primarily serves the automotive industry. The company has shown robust revenue growth over the last three years, surpassing competitors such as Tata Elxsi, L&T Technologies, and KPIT Technologies. With a competitive EBITDA margin of 23.7 percent and a P/E ratio of 18.2x, analysts consider the Tata Technologies IPO to be fairly priced.