Tata Technologies IPO and its potential impact on Tata Motors
Tata Technologies, the 15th largest IT company in India, has filed a Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for its upcoming initial public offering (IPO). As a result, market analysts and shareholders of Tata Motors are calculating the potential benefits of this value unlocking on the company’s balance sheet.
Tata Technologies IPO: Expectations and Grey Market Buzz
According to the Draft Red Herring Prospectus (DRHP) filed by Tata Technologies, Tata Motors had bought Tata Technologies shares for ₹7.40 per share. However, with the expected market capitalization of Tata Technologies to be around ₹18,000 to ₹20,000 crores, market analysts anticipate that one share of Tata Technologies may cost around ₹500 per share. This is expected to lead to a significant appreciation of around 6,650% in Tata Motors’ investment in Tata Technologies Ltd.
Additionally, the grey market is also bullish on the Tata Technologies IPO, with market observers reporting that Tata Technologies shares are trading at around ₹830 per equity share.
Expected Valuations of Tata Technologies IPO
Anuj Gupta, Vice President of Research at IIFL Securities, predicts that the market capitalization of Tata Technologies Ltd is expected to be around ₹18,000 to ₹20,000 crores. He also believes that the public issue will greatly benefit the balance sheet of Tata Motors and that it will unlock value from its investment in the upcoming IPO.
Potential Price of Tata Technologies IPO
Abhay Doshi, the founder of UnlistedArena.com, a company dealing in unlisted stocks, notes that the pricing of Tata Technologies’ IPO will ultimately be determined by the company. However, he also suggests that market analysts are using close peers such as KPIT Tech and Tata Elxsi to estimate its potential valuation. Based on their current P/E ratios at 68x and 55x respectively (TTM basis), it is estimated that Tata Technologies could be valued between ₹700 to ₹880 if we take into account their annualized FY23 EPS of around ₹13.
Potential Price and Investor-Friendly Approach of Tata Technologies IPO
Abhay Doshi, the founder of UnlistedArena.com, a company dealing in unlisted stocks, suggests that the pricing of Tata Technologies’ IPO will ultimately be determined by the company. However, he also notes that market analysts are using close peers such as KPIT Tech and Tata Elxsi to estimate its potential valuation. Based on their current P/E ratios at 68x and 55x respectively (TTM basis), it is estimated that Tata Technologies could be valued between ₹700 to ₹880 if we take into account their annualized FY23 EPS of around ₹13.
Additionally, Doshi highlights the investor-friendly approach of Tata Group and suggests that there is a possibility that the IPO will be priced reasonably, keeping much value on the table for investors.
Bullish Response to Tata Technologies Shares in Unlisted Market
Abhay Doshi, the founder of UnlistedArena.com, a company dealing in unlisted stocks, notes that investors have shown bullishness towards Tata Technologies, as the unlisted shares of the company have already exceeded ₹830. While the ultimate pricing of the IPO remains to be seen, it is clear that there is significant interest in the company.
Expected Date and Launch Time of Tata Technologies IPO
Avinash Gorakshkar, Head of Research at Profitmart Securities, expects SEBI’s nod to Tata Technologies’ IPO in the current quarter, with a maximum of none to two months added before the launch. This means that by July end of this year, we can expect Tata Technologies IPO to hit the primary market. However, he notes that there is no sure-shot time frame for SEBI to give its nod to a DRHP.
About Tata Technologies:
Tata Technologies Ltd, a subsidiary of Tata Motors, is a company within the Tata Group that offers engineering and design services, product lifecycle management, manufacturing, product development, and IT service management to original equipment manufacturers and their suppliers in the automotive and aerospace industries.
For More of the Latest News Click Here
