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Gauging initial market response Prashant Jain makes strategic entry into Tata Technologies as an anchor investor

22 November 20236 mins read by Angel One
Prashant Jain's 3P Fund appears in the list, as analysts endorse Tata Technologies' robust debut amid investor frenzy.
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In a surprising turn of events, the Tata Technologies IPO has captivated the attention of investors, with anchor investors emerging as key players in steering the IPO towards resounding success. Notably, Prashant Jain’s 3P India Equity Fund 1 has made a substantial investment, underlining the confidence of this stock market wizard in Tata Technologies’ potential for growth.

Tata Technologies, a subsidiary of Tata Motors, has made a remarkable entry into the IPO arena, receiving an exceptional response from the market. With an IPO size of Rs 3,042.51 crore and a fixed price band of Rs 475-500 per share, the company’s move signals its confidence in meeting the market’s appetite for its offerings.

Distinguished Anchor Investor Lineup

The anchor investor list is adorned with esteemed names, featuring prominent entities such as The Regents of The University of California – IIFL Asset Management Limited, SBI Multi Asset Allocation Fund, Government Pension Fund Global, BNP Paribas Funds Emerging Markets Climate Solutions, SBI Life Insurance Co. Ltd, and the renowned 3P India Equity Fund 1 managed by Prashant Jain. Collectively, these institutions have invested in over 33 lakh equity shares, securing a substantial portion of the IPO.

Anchor Investor Confidence and Allocation Details

The anchor investor allocation, amounting to a staggering Rs 150 crore, reflects the trust placed by institutional giants in Tata Technologies. Leading the pack is The Regents of The University of California – IIFL Asset Management Limited, securing 4.55% of the anchor investor portion with 7,20,000 equity shares. Close behind are SBI Multi Asset Allocation Fund, Government Pension Fund Global, BNP Paribas Funds Emerging Markets Climate Solutions, and SBI Life Insurance Co. Ltd, each holding a 4.05% stake in the anchor investor segment.

In a surprising twist, Prashant Jain’s 3P India Equity Fund 1, renowned for its strategic investment decisions, has acquired 1,01,071 equity shares, constituting a 0.64% share of the anchor investor pie. The cumulative anchor investor portion stands at an impressive Rs 156,99,35,500, establishing a robust foundation for the IPO’s success.

Unprecedented Investor Response

As the IPO opened for subscription on November 22, the response from various investor categories has been extraordinary. Within the first hour, non-institutional investors (NII) subscribed to 80%, while retail investors exhibited a commendable 48% booking. The qualified institutional buyers (QIB) section witnessed a later surge and was fully subscribed.

By 10:48 IST, the IPO achieved a subscription status of 1.29 times, with the retail investors segment subscribing 1.02 times, NII at 1.45 times, and QIB at an impressive 1.98 times. The employee portion saw a noteworthy 14% subscription.

The collective participation of anchor investors and the overwhelming response from diverse investor categories position Tata Technologies for a stellar market debut. With the IPO scheduled to conclude on November 24, all eyes are set on the listing day, slated for December 5. Market analysts are predicting a record-breaking performance, drawing parallels to Tata Consultancy Services’ IPO success in 2004.

Analysts Take on Tata Technologies IPO 

The consensus among analysts strongly favours a “subscribe” recommendation for Tata Technologies IPO, highlighting the company’s extensive expertise in the automotive sector, well-established brand, seasoned promoters, and solid financial performance.

Nevertheless, analysts have raised typical business concerns, including reliance on a limited number of top clients and third-party vendors, susceptibility to exchange rate fluctuations, and industry competitiveness. Notably, Tata Technologies heavily depends on its top 5 clients, with Tata Motors and its British subsidiary Jaguar Land Rover (JLR) being significant contributors.

As of FY23, the revenue breakdown indicates a reliance on services, predominantly from the automotive sector (80%), followed by products (11%), and education (9%). Despite this concentration, Tata Technologies is well-positioned to capitalize on positive trends in the aerospace sector, driven by the expansion plans of aircraft manufacturers and Maintenance, Repair, and Overhaul (MRO) activities.

About Tata Technologies Ltd 

Tata Technologies Ltd is a global engineering services provider that assists businesses in conceptualizing, developing, and realizing better products and experiences across various industries, including automotive, aerospace, and industrial heavy machinery. They work closely with clients to grasp their specific needs and challenges, then employ their expertise and experience to deliver safer, more sustainable solutions that improve people’s lives. Tata Technologies Ltd stands out with its strategic engineering partnership, deep industry knowledge, cutting-edge technology adoption, global reach, diverse teams, commitment to education and training, and value-added reseller services.

Tata Technologies boasts extensive domain expertise in the automotive industry, strategically expanding its services to adjacent sectors such as aerospace, transportation, and construction heavy machinery (TCHM). As of September 2023, the company’s 12,451 employees operate from 19 global delivery centres across Asia Pacific, Europe, and North America, serving a diverse range of global clients.

With its attractive valuation and broad-based demand, Tata Technologies is poised to make history in the IPO space, marking a significant milestone for the Tata Group after nearly two decades. Investors are eagerly awaiting the listing, anticipating substantial gains and long-term benefits from this landmark offering in the automotive and technology sector.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions. 

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