Tata Technologies shares had a robust start on the stock exchanges, commencing at a premium of 140%, equivalent to Rs 700. The company’s initial public offering (IPO) garnered a tremendous response, signaling substantial investor enthusiasm. Analysts maintain a positive outlook on Tata Technologies’ future prospects.
Tata Technologies shares experienced a remarkable start on the stock exchanges, commencing at a premium of 140%, equivalent to Rs 700, during its debut. The company’s trading debut saw a surge of up to 180%, making it the first Tata Group entity to go public in nearly two decades, with a valuation of Rs 567.94 billion ($6.8 billion). By 10:08 a.m. IST, it peaked at Rs 1,400, securing a spot among the top 10 most actively traded stocks, as reported by Reuters. The stock opened at Rs 1200 on both the NSE and BSE, a significant increase from the issue price of Rs 500.
Before listing, the shares were trading at a premium of Rs 406 in the unlisted market. Market analysts express optimism about the company’s future, emphasizing its long-term potential beyond the initial listing gains, signaling a positive outlook for the stock. Tata Technologies’ IPO, which garnered Rs 3,042 crore, witnessed bids exceeding Rs 1.5 lakh crore, reflecting a subscription of nearly 70 times the shares available.
In terms of subscription, retail individual investors oversubscribed to the reserved quota by 16 times, while qualified institutional buyers and non-institutional investors subscribed 203 times and 62 times, respectively.
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Analysts credit the robust IPO response to appealing valuations compared to industry peers and the strong Tata brand association. Shivani Nyati from Swastika Investmart highlights Tata Technologies’ global footprint and expertise in engineering solutions, positioning it as a preferred partner for multinational corporations across industries. The company’s diverse customer base, robust delivery network, and emphasis on innovation further bolster its competitive edge.
In financial terms, Tata Technologies has outpaced peers in FY21-23 growth, with a FY23 PE ratio of 32-33x, contrasting with 105x for KPIT, 40x for L&T Technology Services, and 70x for Tata Elxsi. Specializing in manufacturing-focused engineering research and development (ER&D), the company predominantly serves the automotive industry, engaging with seven of the top 10 automotive ER&D spenders and five of the 10 leading new energy ER&D spenders in 2022. As of FY23, 80% of its revenue is derived from services, 11% from products, and 9% from education.
In H1 FY23, Tata Technologies achieved a 35% YoY increase in total income to Rs 2,587 crore, with net profit experiencing a 36% rise to Rs 352 crore during the same period.
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