Tata Technologies IPO fully subscribed within 60 mins; QIB, NII, retail quotas booked fully

Tata Technologies IPO, which opened for subscription today, got fully subscribed within the first hour of bidding process. Buying was seen across investor categories, as the issue by pure-play manufacturing focused ER&D company received bids for 6,04,26,120 shares by 10.48 am, which was 1.34 times the issue size of 4,50,29,207 shares. The quota reserved for qualified institutional buyers was subscribed 1,98 times, as investors bade for 2,08,51,470 shares against 1,05,47,382 shares that were reserved for the institutional category.

The quota reserved for non institutional investors (NIIs) was subscribed 1.45 times. Retail individual investors (RIIs) also bade heavily, with 1.02 times subscription within the first 60 minutes. The shareholders quota was subscribed 1.59 times while the quota reserved for employee was booked 14 per cent. The issue, which is being sold in the price band of Rs 475 to Rs 500 per share, will conclude on Friday.

Analysts are largely positive on Tata technologies. "At the upper end of the price band, Tata Tech is being valued at 32 times its FY23 EPS versus peers’ such as LTTS (40 times its FY23 EPS), Tata Elxsi (69 times its FY23 EPS), KPIT (110 times its FY23 EPS), and Cyient (37 times its FY23 EPS)," said Emkay Global in a note.

"Tata Tech’s growth trajectory over FY16-23 remains slower than peers’, but has seen improvement in the last three years because of traction in select accounts. Weakness in a large client in H1FY24 due to near completion of the large full-vehicle development projects may weigh on the company’s near-term performance which, in our view, is adequately captured in the IPO valuations," it said.

Geojit said Tata Technologies' strong brand legacy, extensive automotive expertise, diversified global presence and strategic partnership with industry leaders provide a distinct advantage that aligns well with its growth ambitions. The domestic brokerage has assigned a “Subscribe” rating on the IPO based on a medium-to-long-term outlook.

Tata Technologies is focused on automotive industry and is engaged with seven out of top 10 automotive ER&D spenders and five out of the 10 prominent new energy ER&D spenders in 2022. There are some similarities between Tata Technologies and Tata Elxsi. Revenues from auto vertical accounted for 88 per cent of Tata Teleservices revenues in H1 against Tata Elxsi's 46 per cent. KPIT Technologies Ltd, thus, is more of a peer for Tata Technologies with 96 per cent revenues from auto vertical.

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