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Tata Tech IPO: GMP soars 70% for first Tata Group issue in 20 years hot news

Ahead of Tata Technologies’ initial public offering (IPO) next week, its shares are already demanding a premium (GMP) of Rs 240-260 in the grey market — a 68-70% uptick over the issue price of Rs 475-500 per equity share.

The issue opens for public subscription on November 22 and will close on November 24. This will be the first IPO by any Tata Group company in the last 20 years.

Tata Technologies is a leading global engineering services company offering product development and digital solutions to global original equipment manufacturers (OEMs). The company’s services include concept design, tear-down and benchmarking, vehicle architecture, body and chassis engineering, electrical and electronics systems, and diagnostics. It has a workforce of over 11,000 employees spread across 18 global delivery centres.

The IPO is book building and entirely an offer for sale (OFS) with the selling shareholders, including promoter Tata Motors, receiving the entire proceeds from the issue. Under the OFS, parent Tata Motors will sell 4.62 crore shares, Alpha TC Holdings will offload 97.1 lakh and Tata Capital Growth Fund will give up 48 lakh shares.

The issue size has been reduced from an earlier 9.57 crore to 6.08 crore equity shares now. The company filed its IPO papers with Sebi in March and received approval from the regulator in June.

In the issue, Tata Technologies has reserved a 10% quota for Tata Motors’ eligible shareholders.

The weighted average of the cost of acquisition for Tata Motors is Rs 7.40/share; Rs 25.10 for investors Alpha TC Holdings and Tata Capital Growth Fund I according to the Draft Red Herring Prospectus (DRHP) filed by the company with Sebi.Tata Tech was last valued at around $2 billion (Rs 16,300 crore), when TPG Climate picked up about 9% stake in the company.

For the nine-month period ended December 2022, the company clocked 15% year-on-year (YoY) growth in revenue at Rs 3,052 crore. The services segment contributed 88% of the total revenue. The company’s net profit during the same period stood at Rs 407 crore. Over FY 2021-23, its revenue grew at a compound annual growth rate (CAGR) of 30%, leading to a 46% EBITDA CAGR. PAT for the same period increased at a CAGR of 61.5%.

JM Financial, Citigroup Global Markets India, and BofA Securities India are the book-running lead managers to the IPO. Link Intime India Private Limited is the registrar to the issue.
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