Tata Technologies IPO effect! This Tata Group stock surges 39% in two sessions

Ahead of the opening of the highly-anticipated initial public offering (IPO) of Tata Technologies, Tata Investment Corporation (TICL), one of the holding companies of the Tata Group, has witnessed strong demand for its shares. In the last two sessions, the share price of TICL has risen nearly 39%, hitting its fresh 52-week high, amid hopes that the Tata Technologies IPO will unlock value for shareholders.

Tata Technologies is a subsidiary of Tata Motors in which Tata Investment is a promoter group entity. Tata Motors owns 74.69% shareholding in Tata Technologies, while Alpha TC Holdings Pte and Tata Capital Growth Fund I hold 7.26% and 3.63%, respectively, in the company.

Early today, Tata Investment shares opened higher for the fourth straight session at ₹4,038, up 3.4% against the previous closing price of ₹4,038 on the BSE. Extending opening gains, the Tata group stock gained as much as 15.8% to hit a new 52-week high of ₹4,521.90, driven by a surge in volume trade.

At the time of reporting, shares of Tata Investment were up 12.85% at ₹4,407 apiece on the BSE, while the market capitalisation stood at ₹22,297 crore.

TICL shares have risen 160% against its 52-week low of ₹1,735 touched on March 31, 2023. In the last one year, the midcap stock has surged over 89%, while it more than doubled in the calendar year 2023. The counter has rallied more than 100% in six months, whereas it added 35% in a month.

Last month, CRISIL assigned the highest rating of ‘AAA’ with ‘Stable’ rating on the non-convertible debentures (NCDs) of TICL, citing the company’s healthy capital position, robust and well-diversified investment portfolio, healthy earnings profile, and comfortable liquidity.

Tata Investment shares have seen a surge in buying momentum after Tata Technologies, a subsidiary of Tata Motors, unveiled a plan to launch the public offer, which is going to be the first public offering by a Tata Group company in 20 years. The much-awaited IPO of Tata Tech will open for subscription on November 22 and close on November 24. The IPO is completely an offer for sale (OFS) of 6.08 crore equity shares, which will see Tata Motors offloading 11.4% stake in the company.

The global engineering services company has set the price band of its IPO at ₹475-500 per share, aiming to raise ₹3,042 crore at the upper end of the price band. The stock is slated to be listed on the BSE and the NSE on December 5. 

The lot size has been fixed at 30 equity shares and its multiples thereof. For retail investors, the minimum investment amount is ₹15,000 for 30 shares, and the maximum is ₹1.95 lakh for 390 shares.

Ahead of the IPO, Tata Technologies was commanding a grey market premium (GMP) of ₹350, estimated listing price to be around ₹850 (IPO price of ₹500 + today's GMP).

The Pune-based Tata group company provides services in engineering and design, product lifecycle management, manufacturing, product development, and IT service management to automotive and aerospace original equipment manufacturers and their suppliers. It mostly relies on the Tata group for business, especially Tata Motors and Jaguar Land Rover, and has reported a net profit and revenue of ₹351.90 crore and ₹2,587.42 crore during the quarter ended September 30, 2023. 

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