In 2022, India experienced a significant surge in IPO volumes, although a considerable decrease of approximately 56% in the overall proceeds compared to the previous year, 2021. Notably, amidst this trend, the year they had a notable highlight with the substantial Life Insurance Corporation IPO, which raised a considerable $2.7 billion. However, investor sentiments faced challenges due to less favorable market conditions and disappointing post-IPO performances. During this period, the announcement of the Tata Technology IPO emerged, drawing attention amid the overall subdued investor sentiment.
In the stock market, the term “disruptive” concerning technology stocks refers to their capability to make significant and revolutionary changes within their industry or market segment. Contrary to any negative implication, being labeled as disruptive has a positive connotation, suggesting that these specific technology stocks have the potential to shake up the stock market positively. Such stocks, often associated with innovative companies, may be considered for investment due to their technological advancements, promising innovations, and the potential for high returns resulting from these developments.
Source: Research ranking
Most disruptive technology stocks in India
B2B Software Technologies
Bartronics India Ltd
Xchanging Solutions Ltd
63 Moons Tech
Tata Tech IPO
Sebi registered investment advisory recommends one name that stands out amongst these and that’s Tata Tech IPO. Tata Technologies’ shares are experiencing significant demand in the unlisted market, commanding an impressive premium of almost 80% over the IPO price. The stock is trading at a premium of Rs 380, marking a considerable increase from the issue price of Rs 500.
Should this current trend persist, analysts anticipate the potential for the company to double investors’ wealth on the day of its listing.
Tata Technologie, a subsidiary of Tata Motors, resubmitted a supplement to its DRHP (draft red herring prospectus) on October 4, 2023. The revised filing indicates that the anticipated IPO will consist of 9.57 crore shares, each valued at ₹2 per share.
Initially filed on March 10, the IPO structure might include a combination of Offer for Sale (OFS) and new shares.
Tata Motors, holding a 74.69% stake in Tata Tech, plans to sell up to 81.1 million shares. At the same time, Alpha TC Holdings and Tata Capital Growth Fund I also intend to sell 9.7 million and 4.9 million, respectively.
The company has reserved a portion for employees, allowing a maximum bid amount of up to Rs. 5 lakh and a quota for Tata Motors shareholders, with a maximum bid amount capped at Rs. 2 lakh. Tata Technologies has enlisted the assistance of financial institutions like JM Financials, Citi, and BofA Securities to facilitate the IPO process.
Tata Motors’ decision to consider several vital factors drove Tata Technologies’ IPO:
- Revenue Diversification: Tata Technologies increased its earnings from non-captive accounts, reducing reliance on Tata Motors and Jaguar Land Rover for revenue.
- Chip Shortage Impact: Tata Motors faced challenges producing Jaguar Land Rover vehicles due to a semiconductor shortage.
- Financial Concerns: Tata Motors sustained a net loss of Rs. 945 Crore in Q2 and saw a rise in automotive debt.
- Debt Reduction Strategy: Tata Motors aims to minimize its automotive debt by 2024 and plans to use proceeds from the Tata Technologies IPO to ease losses and reduce debt.
- Previous Attempt: Tata Motors previously called off a deal to sell its stake in Tata Technologies due to regulatory approval delays.
- Strategic Shift: Tata Motors aims to diversify beyond the auto industry, focusing on non-automotive sectors to ensure consistent revenue amidst global uncertainties.
The success of the Tata Tech IPO is still being determined due to market volatility and regulatory factors. However, the company has shown resilience amid challenges, achieving strong financial results, including revenue growth, improved operating profits, and notable awards for innovative solutions, contributing to the Tata Group’s brand value.
When will Tata Tech IPO launch?
The Tata Technologies IPO was scheduled from November 22 to November 24, 2023.
Are Tata Tech shares listed on the stock exchange?
Currently, Tata Technologies shares are not listed on any stock exchange. However, after the IPO, the company will list its shares by December 5, 2023.
Should you consider Technology stocks?
Expanding beyond the IT sector, technology stocks encompass various industries like defense technology, semiconductors, sustainable tech, and drone technology. The technology domain extends beyond AI and IoT, offering diverse investment opportunities across different sectors. In India, innovative companies are emerging, making significant technological strides, making it an attractive hub for potential tech investments.
In conclusion, while technology stocks hold promising potential for the future, thorough analysis before investing is crucial. Refrain from relying solely on friend and relative recommendations. Upon opening a demat account, conducting thorough research will aid in identifying technology stocks with the potential for substantial future returns.