There has been a rise in queries for unlisted shares of Tata Technologies, the engineering and design arm of Tata Group, ahead of its public issue, dealers said.
Tata Technologies, the engineering and design arm of Tata Group, has filed draft papers with Sebi to for an initial public offering (IPO). A subsidiary of Tata Motors, Tata Technologies is looking to offload a little over 9.57 crore equity shares, or 23.6 per cent stake, via offer for sale.
Dealers, who buy and sell unlisted securities, said shares of Tata Technologies are currently being sold in the range of Rs 750-800 apiece. The stock has turned multibagger in the last one year, rising 100 per cent from Rs 400-level a year ago.
The company has been in demand due to strong fundamentals, robust performance and parentage of Tata Group, which is one of India’s largest conglomerates, said Dinesh Gupta, co-founder of Unlisted Zone, a Delhi NCR based boutique firm.
“However, the stock at Rs 800 per share is richly priced. We expect the IPO price to be at a steep discount from the current market prices, as Tata group may leave something on the table for small investors. A lot of them apparently are interested on the counter and buying are the stock in off-market deals.”
Tata Technologies recently announced a slew of corporate actions They were split into the 1:5 ratio recently. Each share of Tata Technologies with a face value of Rs 10 each was divided into five shares of Rs 2 each. The company subsequently announced a bonus issue in the 1:1 ratio. Effectively, each share of the company was turned into 10 shares.
Narottam Dharawat, Founder of Mumbai based Dharawat Securities said that there is no doubt about the company’s financial performance, business model and legacy but a lot will depend upon the pricing of the issue.
“The number of shares to be sold under the issue is relatively less, which will create a lot of demand from institutional investors. Investors with a very long-term view are buying from the private market as pre-IPO shares will be put under mandatory lock-in once the basis of allotment is finalized.”
Tata Technologies will allocate 50 per cent of shares to qualified institutional buyers (QIBs), whereas 15 per cent of shares will be reserved for non-institutional investors (NIIs). Retail investors will get the remaining 35 per cent shares of the offer.
JM Financial, Citigroup Global Markets India and BofA Securities India are the book running lead managers to the issue, whereas Link Intime India has been appointed as the registrar to the issue. Shares of Tata Technologies will be listed on both BSE and NSE.
Tata Technologies has been at the forefront of driving innovation and providing quality services to its clients, with a significant contribution from its service segment, said Krishna Raghavan, Founder of UnlistedKart.
“With a successful IPO, the company will be able to generate more value for its shareholders and continue its growth trajectory. With the backing of its existing promoters and shareholders, Tata Technologies is poised for a bright future,” he added.
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