Tata Technologies IPO Launch Creates Buzz In The Indian IT Sector

Tata Technologies is India’s 15th largest IT company. Tata Technologies IPO is coming with a projected market capitalization of ₹18,000 to ₹20,000 crore.

Tata Technologies, India’s 15th largest IT company, recently filed its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for its upcoming Initial Public Offering (IPO). 

Market observers and shareholders of Tata Motors are eagerly awaiting the IPO launch, anticipating significant value unlocking for the Indian auto major’s balance sheet.

Tata Motors had previously acquired Tata Technologies shares at a price of ₹7.40 per share. Based on market expectations, Tata Technologies’ market capitalization is projected to be around ₹18,000 to ₹20,000 crore. 

This means that one share of Tata Technologies would cost approximately ₹500, resulting in a significant appreciation of Tata Motors’ investment in Tata Technologies Ltd. Currently, in the gray market, Tata Technologies shares are trading at around ₹830 per equity share.

Valuations and Pricing of Tata Technologies IPO

According to Anuj Gupta, Vice President of Research at IIFL Securities, the IPO is expected to significantly improve Tata Motors’ balance sheet. Gupta projects that Tata Technologies Ltd will have a market capitalization of around ₹18,000 to ₹20,000 crore.

Abhay Doshi, founder of UnlistedArena.com, estimates the potential valuation of Tata Technologies based on the current P/E ratios of comparable companies such as KPIT Tech and Tata Elxsi. 

Doshi predicts that Tata Technologies could be valued between ₹700 to ₹880 based on their annualized FY23 EPS of around ₹13.

However, Doshi adds that Tata Group is known for its investor-friendly approach, suggesting that the IPO may be priced reasonably, offering significant value to investors.

Interest in Tata Technologies IPO

Despite uncertainty surrounding the IPO launch date, there is significant interest in Tata Technologies. The unlisted shares of Tata Technologies are already trading above ₹830 in the gray market, reflecting investors’ bullishness towards the company.

According to Avinash Gorakshkar, Head of Research at Profitmart Securities, SEBI is expected to approve the IPO in the current quarter, with the launch expected within the next two months. However, Gorakshkar cautions that there is no guaranteed timeline for SEBI’s approval.

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Currently, the anticipation of the Tata Technologies IPO is high, with investors and market observers closely monitoring its progress. The IPO is expected to unlock significant value for Tata Motors and offer attractive opportunities for investors.