A Tata Group company has filed a prospectus with the help of SEBI (market regulator) because it decides to maximize funds aiding Initial Public Offering (IPO). The IPO has only an Offer For Sale (OFS) due to the shareholders and promoters as they are planning to sell their part of shares.
Since Tata Technologies has drafted a prospectus for launching an IPO, you can see that stock market experts are swamped in analyzing and calculating the impact of Tata Technologies IPO on Tata Motors. Experts are highly confident in both Tata Technologies IPO and Tata Motors.
The Tata Technologies IPO GMP is stagnant in the existing condition. In IPO, the GMP is the premium amount that deals in trading IPO shares before being listed under the stock market.
How Tata Technologies IPO Will Have a Significant Impact on the Share Price of Tata Motors?
As per the Head of Research at Profitmart Securities Avinash Gorakshkar, “Tata Technologies IPO is likely to perform well as the public issue has a back of huge Tata brand. The Public issue would be responsible for the inflow and outflow of cash in Tata Motors that is expected to increase the balance sheet and margins of the auto company.
As Tata Technologies Ltd is an IT company, it seems to be an investment of the surplus amount at Tata Motors only when it acquired shares of Tata Technologies. Therefore, it is expected that the Tata Technologies IPO should be seen and treated as profit booking by Tata Motors. He added that Tata Motors reported robust Q3 numbers in Financial Year 2023 and will provide alluring Q4 numbers.
Tata Technologies IPO Details
The Tata Technologies IPO consists of a pure Offer For Sale of up to 95.71 million shares. Tata Capital Growth Fund I will sell up to 4.86 million shares (1.20 percent), Alpha TC Holdings Pte plans to sell up to 9.72 million shares (2.40 percent), and Tata Motors will sell up to 81.13 million shares (20 percent).
According to DRHP, the average cost of acquisition/equity share holded by the selling shareholders with the help of promoter selling shareholder which are as follows:
- Tata Capital Growth Fund I hold 14,722,500 equity shares at a price of ₹25.10.
- Alpha TC Holdings Pte. Ltd. holds 29,445,010 equity shares at a price of ₹ 25.10 per share.
- Tata Motors Ltd. holds 303,006,000 equity shares at a price of ₹ 7.40 per share.
The Price of the IPO is not fixed yet. And according to the experts, the issue price of Tata Technologies would be at least 4-5 times higher than the rate at which Tata Motors holds a stake in Tata Technologies. Moreover, it would convert to an issue price between ₹30 and ₹40 per share.
Wrapping Up
Positional investors are highly recommended to buy Tata Motors shares, which have provided a fresh breakout at ₹460/per share levels on a closing basis. One can also buy the stock at existing levels at a near term target of ₹ 490 – ₹500 apiece level to maintain a stop loss at ₹450.