Shares of Tata Investment Corporation (TIC) have been on a winning run in the calendar year 2023 with the counter having doubled investors’ money on a year-to-date basis.
The recent surge in the stock follows a value-unlocking exercise by Tata Motors in its subsidiary Tata Technologies through a Rs 3,000-crore IPO which opens on November 22.
Majorly owned by Tata Sons, Tata Investment owns a stake in several group companies as a promoter group holding company. In the case of Tata Motors, TIC owns just 0.33% stake while Tata Sons owns the bulk of 43.71% share.
Tata Tech IPO, the first public issue for the sale of shares from the much-storied salt-to-software conglomerate in the last 20 years, is priced in the range of Rs 475-500 per share. The IPO is a 100% offer for sale (OFS) in which Tata Motors will sell 4.62 crore shares, Alpha TC Holdings will offload 97.1 lakh shares and Tata Capital Growth Fund will give up 48 lakh shares.
At the upper end of the price band, Tata Tech is being valued at ~32x its FY23 EPS vs. peers such as LTTS (~40x its FY23 EPS), Tata Elxsi (~69x its FY23 EPS), KPIT (~110x its FY23 EPS), and CYL (~37x its FY23 EPS), Emkay said.
Tata Tech’s growth trajectory over FY16-23 remains slower than peers’, but has seen improvement in the last three years because of traction in select accounts.If grey market trends are to be believed, Tata Tech IPO can list on stock exchanges at a premium of around 65-70%.
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