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Tata Technologies Ltd. more than doubled in its trading debut, marking the best listing day gains for any Indian initial public offering of its size.
Shares gained as high as 1,400 rupees on Thursday versus an offer price of 500 rupees before closing at 1,313 rupees in Mumbai. The engineering research unit of Tata Motors Ltd., the maker of Jaguar Land Rover cars, raised 30.4 billion rupees ($365 million) in an IPO that was oversubscribed 69 times. The listing is the first from the salt-to-software group since 2004.
Tata Technologies’ first-day pop is the best debut for any Indian company that raised more than $300 million, data compiled by Bloomberg show. The IPO was among five offerings last week that together garnered 2.5 trillion rupees in application amount, as the nation’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 $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 equity values to records.
While the 205 IPOs in India so far in 2023 have mostly been small — only two raised more than $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 Wednesday.
Gandhar Oil Refinery India Ltd. also started trading Thursday, with its shares rising as much as 104% over the issue price.
“Strong optimism in the domestic market has fueled 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 company is now Asia’s largest software exporter by market value and its shares have returned more than 21% annually since their debut in 2004. That compares with the 16% yearly gain in the S&P BSE Sensex Index.
“We all know what a big story TCS became after its listing,” investor Chawan said.
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, Chief Executive Officer of Tata Technologies, said during the listing ceremony in Mumbai.
(Updates with closing prices.)
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