The Tata Group is planning to launch its new Initial Public Offering (IPO) after almost two decades. The market regulator SEBI (Securities and Exchange Board of India) had approved Tata Technologies’ IPO on June 27. However, the company has not yet announced the price band for its IPO. Industry experts speculate that the price of the company’s shares could be around 268 INR. Interestingly, even in the grey market, there is a strong demand for its shares, with trading happening at a premium of about 100 INR.
This IPO marks the first time since 2004 that the Tata Group is going public. It is also the first IPO for the group after Natarajan Chandrasekaran’s appointment as the Chairman of Tata Sons.
On the day of SEBI’s approval, the grey market premium for the IPO was 76 INR. By the previous Saturday, July 29, the premium had increased to 84 INR, and by July 20, Sunday, it reached up to 100 INR.
According to Rajesh Sinha, Senior Research Analyst at Bonanza Portfolio, Tata Technologies reported a revenue of 3,983 crore INR and a profit of 513 crore INR for the last twelve months. This translates to an earnings per share (EPS) of 2.65 INR per share.
He also suggested comparing Tata Technologies with Cyient, a similar business company, which had a revenue of 6,016 crore INR for the last twelve months and is currently trading at 23.5 times its EPS of 46.52 INR.
Tata Technologies had applied for its IPO with SEBI on March 9, 2023. The IPO is an offer-for-sale, where the company’s promoters and shareholders will offer approximately 9.571 billion shares for sale. Among the selling shareholders are Alfa TC Holdings Private Limited, Tata Motors, and Tata Capital Growth Fund. Alfa TC Holdings Private Limited holds a 7.26% stake in the company, while Tata Motors holds a 74.69% stake.
Tata Motors plans to sell 81,133,706 equity shares, Alfa TC Holdings Private Limited will sell 9,716,853 equity shares, and Tata Capital Growth Fund will sell 4,858,425 equity shares.
Reports suggest that the entire IPO process for Tata Group could take around one and a half to two months to complete, including determining the price band. After that, the company is expected to announce the possible dates for the IPO, possibly by the end of August or by mid-September 2023.
