CEO Morning Brief

Tata Technologies Surges 180%, Poised to be Best IPO Debut in India

Publish date: Fri, 01 Dec 2023, 09:14 AM
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TheEdge CEO Morning Brief

(Nov 30): Tata Technologies Ltd more than doubled in its trading debut, with the surge putting the company on track to deliver the best listing gains for any Indian initial public offering (IPO) of its size.

Shares gained as high as 1,400 rupees on Thursday versus an offer price of 500 rupees. The engineering research unit of Tata Motors Ltd, the maker of Jaguar Land Rover cars, raised 30.4 billion rupees (US$365 million or RM1.7 billion) in an IPO that was oversubscribed 69 times. It is the first company to list from the salt-to-software Tata conglomerate since 2004.

The 180% jump is set to make Tata Technologies’ debut the best for any Indian company that raised more than US$300 million, data compiled by Bloomberg showed. The IPO was among five offerings last week that together garnered 2.5 trillion rupees in application amount, as India’s booming stock market sparks a frenzy for new listings.

“I expected the shares to gain about 50%-60% on the first day, but this sort of response is mind-blowing,” said Aditya Chawan, a 34-year-old investor in Mumbai, who secured 30 shares of Tata Technologies. “It’s the Tata brand that makes the difference.”

Chawan is one among millions of retail investors drawn to India’s US$3.9 trillion stock market since the depths of the pandemic, a cohort that’s been a force behind the rally that’s lifted the nation’s benchmark equity indices to records.

While the 205 IPOs in India so far in 2023 have mostly been small — only two raised more than US$500 million — about 80% of the newcomers are trading above their offer prices versus 62% in Asia. Indian Renewable Energy Development Agency Ltd, a state-run lender to renewable energy projects, surged 88% in its trading debut on Wednesday.

Gandhar Oil Refinery India Ltd also started trading on Thursday, with its shares rising as much as 104% over the issue price.

“Strong optimism in the domestic market has fuelled the surge in IPO listings in the last two years,” Jahnavi Prabhakar, an economist at Bank of Baroda wrote in a note on Wednesday. “A large number of IPOs have been listed at a premium, making this a win-win situation for investors.”

The 155-year-old Tata Group’s last initial share sale was by Tata Consultancy Services Ltd almost two decades ago. The software giant’s shares have returned more than 21% annually since their debut in 2004, beating the 16% yearly gain in the S&P BSE Sensex Index.

Tata Technologies provides engineering research and development services along with product development and digital solutions to global OEMs and their key suppliers. The company is looking to expand into aerospace, transportation and electric vehicles.

Its automotive business delivers about 70% of sales, with Tata Motors and JLR among key clients and Vietnam’s Vinfast emerging as a major customer.

“The IPO opens new growth opportunities and deepens our understanding that how in the future we intend to leverage the support of the capital markets,” Warren Harris, the chief executive officer of Tata Technologies, said during the listing ceremony in Mumbai.

Source: TheEdge - 1 Dec 2023

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