Tata Motors share hits life-time high after SEBI’s nod to Tata Technologies IPO
Tata Technologies IPO effect: After getting the Securities and Exchange Board of India (SEBI) giving nodd to Tata Technologies Ltd for the launch of its initial public offering (IPO), Tata Motors share price has become highly bullish. In fact the auto major has been in uptrend since Tata Technologies submitted Draft Red Herring Prospectus (DRHP) at SEBI on 9th March 2023. When Tata Technologies submitted its DRHP at SEBI, Tata Motors shares were around ₹430 apiece levels, whereas Tata Motors share price today is around ₹600 levels, logging near 40 per cent rise in these near four months.
Tata Motors share price today opened with an upside gap and went on to hit intraday high of ₹602.30 apiece levels on NSE, which became a new life-time high for the auto stock. According to stock market experts, this rise in Tata Motors shares is due to the positive sentiments in regard to the stock after SEBI’s approval to Tata Technologies IPO last week and auto company’s announcement to raise passenger vehicle prices by 60 basis points. They said that net proceeds of the Tata Technology IPO will go to the balance sheet of Tata Motors as the upcoming IPO comprises fresh issue of equity shares worth ₹357 crore and an offer for sale (OFS) of 1.2 crore by promoters and existing shareholders, according to the draft red herring prospectus (DRHP). They said that Tata Motors share price may go up to ₹625 apiece levels in near term.
Why Tata Motors shares are skyrocketing?
On why Tata Motors shares are rising today, Avinash Gorakshkar, Head of Research at Profitmart Securities said, “Auto theme is already working in Indian market after strong economic indicators like better than expected GDP numbers, robust GST collection, etc. But, after the announcement by Tata Motors company to increase prices of passenger vehicles and SEBI’s approval to Tata Technology IPO, market has gone further bullish on Tata Motors shares.”
On reason for market going bullish on Tata Motors shares after SEBI nod to Tata Technologies IPO, Avinash Gorakshkar said, “Tata Technologies IPO is mix of OFS and fresh issue where Tata Motors is one of the shareholders offering shares in OFS. This means net proceeds of the public offer will go to its promoters. Tata Motors being one of the promoters who have offered their shares for sale in this IPO, is expecting to benefit from this IPO. Therefore, market is highly bullish on Tata Motors after SEBI’s nod to Tata Technologies IPO as the public issue has move one more step close to the IPO launch. Now market is awaiting Tata Technologies IPO launch and price band announcement by the company.”
Advising ‘buy and hold’ strategy in regard to Tata Motors shares, Sumeet Bagadia, Executive Director at Choice Broking said, “Tata Motors share has support placed at ₹570 and it is looking bullish on chart pattern. Those who have this stock in portfolio may further hold the scrip for near term target of ₹625 maintaining stop loss at ₹570. For those who missed to buy the scrip earlier, they can also buy Tata Motors shares at current market price for ₹625 apiece levels maintaining stop loss at ₹570 levels.”
Tata Technologies IPO gets SEBI’s nod
Last week, Tata Technologies Ltd received SEBI’s nod for the launch of its public issue. Tata Technologies is purely an offer for sale (OFS), where the company will sell up to 9.57 crore equity shares representing approximately 23.60 per cent of its paid-up share capital, according to the Draft Red Herring Prospectus (DRHP) filed in March. Under the OFS, Tata Technologies’ parent company Tata Motors will offload 8.11 crore shares or a 20 per cent stake in the company. Among other shareholders, Alpha TC Holdings Pte plans to sell up to 97.16 lakh shares (2.40 per cent) and Tata Capital Growth Fund I would offload up to 48.58 lakh equity shares (1.20 per cent).
Tata Technologies IPO details
After submission of DRHP at SEBI on 9th March 2023, SEBI has given its nod to the Tata Technologies IPO. As per the market observers, Tata Technologies share price is around ₹850 in unlisted market whereas as Tata Motors had bought its stake in the company paying ₹7.40 per share. So, the grey market is signaling big profit for the Tata Motors from this IPO because the IPO is purely an OFS.
The IPO comprises fresh issue of equity shares worth ₹357 crore and an offer for sale (OFS) of 1.2 crore by promoters and existing shareholders, according to the draft red herring prospectus (DRHP).
Those offering shares in the OFS include promoters Ramesh Babulal Parekh, Kailash Parekh and Gulab Parekh and other shareholders, Fleet Line Shipping Services LLC, IDFC First Bank Limited, Denver Bldg Mat & Décor TR LLC and Green Desert Real Estate Brokers.
Proceeds from the fresh issue component will be used for payment of debt and for purchase of equipment and civil work required for expansion in capacity of automotive oil at Silvassa plant.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Updated: 03 Jul 2023, 12:17 PM IST
