New Delhi: Tata Technologies is set to make waves on Dalal Street with its upcoming IPO on November 22, 2023. This IPO provides a golden opportunity for those who should have started trading the company’s shares in the unlisted market. However, the unlisted market for Tata Technologies has been ‘frozen’ since November 13, preventing share transfers after filing the red-herring prospectus.
Unlike standard practices, Tata Technologies surprised analysts by implementing a lock-in on pre-IPO shares well before the allotment day. This move has disappointed some market participants, as there was no prior communication about the suspension of share trading or the activation of the lock-in period.
Despite these developments, dealers anticipate a promising IPO with a price band estimated at Rs 500-525 per share or even Rs 550. This marks the first IPO by the Tata Group in nearly two decades, following Tata Consultancy Services Ltd (TCS). The grey market currently reflects a premium of Rs 290-300 per share, indicating strong investor interest.
Before the suspension, Tata Technologies had previously traded at 840-850 in the private market. The expectation is a robust listing, with market watchers projecting a solid debut. Dinesh Gupta, co-founder of UnlistedZone, highlights the excitement surrounding Tata Technologies due to its strong Tata Group lineage.
Gupta predicts an annualized EPS of around Rs 16 per share, comparing favourably to peers like KPIT Technologies and Sterlite Tech, which trade at multiples of 50-55 times the annualized EPS. Based on this, he suggests a fair value of Rs 800-900 per share at listing.
Tata Technologies reported a net profit of Rs 351.90 crore and a total revenue of Rs 2,587.42 crore for the half-year ending on September 30, 2023. With an offer-for-sale (OFS) of 6,08,50,278 equity shares, the company aims to raise around Rs 3,000-3,200 crore through the IPO.
Despite the freeze in the unlisted market, there is optimism that Tata Technologies could see a listing in the Rs 800-900 range, especially if market sentiments remain favourable. Investors are eagerly awaiting the IPO, drawn by the company’s strong financials and the overall enthusiasm in the market.