Tata Technologies IPO: Final Subscription Soars 69.43 Times

Tata Technologies IPO opened for subscription on 22nd November 2023 and closed on 24th November 2023. The stock of Tata Technologies Ltd has a face value of ₹2 per share and the price band for the book building IPO has been set in the band of ₹475 to ₹500 per share. The final price will be discovered within this band. Tata Technologies IPO will be purely an offer for sale (OFS), with no fresh issue component to it. As you would be aware, an OFS is just a transfer of ownership and does not entail dilution of equity or of EPS. The offer for sale (OFS) portion of the IPO of Tata Technologies Ltd comprises the sale of 6,08,50,278 shares (608.50 lakh shares), which at the upper price band of ₹500 per share will translate into an offer for sale (OFS) size of ₹3,042.51 crore. There are only 3 sellers in the OFS.

The OFS selling will be by 1 promoter shareholder of the company and 2 investor shareholders. Out of the 608.50 lakh shares offered in the OFS, the promoter shareholder (Tata Motors) will offer 462.75 lakh shares while the investor shareholders comprising of Alpha TC Holdings (97.17 lakh shares) and Tata Capital Growth Fund I (48.58 lakh shares). Since there is no fresh issue component, the overall IPO of Tata Technologies Ltd will comprise of the issue and sale of 6,08,50,278 shares (608.50 lakh shares approximately), which at the upper price band of ₹500 per share will translate into total IPO issue size of ₹3,042.51 crore. The entire IPO of Tata Technologies Ltd is an offer for sale (OFS), so there would be no fresh funds coming into the company. The IPO will be lead managed by JM Financial, Citigroup Global Markets and BOFA Securities. Link Intime India Private Ltd will be the registrar to the issue.

How subscriptions evolved in the Tata Technologies IPO period?

While the QIB portion and the HNI / NII portion picked up traction on the last day, the overall journey was quite moderate for the retail investors. In fact, the QIB portion, the HNI / NII portion and  the retail portion; all of them got fully subscribed on the first day of the IPO itself. As a result, even the overall IPO saw subscription book filling up 6.34 times, at the close of the first day of the IPO itself. The IPO was kept open for a total period of 3 days from November 22, 2023 to November 24, 2023. The table below captures the day-wise progress in IPO subscription.

As can be seen from the above table, the overall IPO got 69.43 times subscribed at the close of the third and final day of the IPO on 24th November 2023. Here is a quick look at how the various categories saw traction on the last day of the IPO.

• The QIB portion got 4.08 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 8.55X to 203.41X.
   
• The HNI / NII portion got 11.93 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 31.19X to 62.11X.
   
• Retail portion got 6.05 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 11.56X to 16.50X.
   
• The overall IPO got 6.34 times subscribed at the end of the first day of the IPO. However, on last day of the IPO, overall subscription moved from 15.10X to 69.43X.

Rapid update on the overall Tata Technologies IPO response

The IPO saw fairly strong flows on Day-1 and Day-2, with most of the action getting accentuated on Day-3 of the IPO. However, the IPO did close with relatively healthy subscription numbers at the close of Day-3. In fact, the IPO of Tata Technologies Ltd got fully subscribed on the first day of the IPO itself with full subscription also seen across categories, including that of employees. As per the combined bid details put out by the BSE at the close of Day-3, Tata Technologies Ltd IPO was subscribed 69.43X overall.

The best demand came from the QIB segment, followed by the HNI / NII segment and the retail segment in that order. In fact, the institutional segment and the HNI / NII segments saw some very good traction on the last day. The HNI portion did do well and a lot of the surge of funding applications and corporate applications did come in on the last day of the IPO. Retail portion was relatively strong, although it was fully subscribed on Day-1 of the IPO itself, but subsequent traction was limited. Firstly, let us look at the details of overall reservation of shares to different categories of investors.

Having understood the allocation of shares across various categories, Let us look at how the subscription data played out for the IPO at an overall level and at a more granular level.

As of close of 24th November 2023, out of the 450.29 lakh shares on offer in the IPO, Tata Technologies Ltd saw bids for 31,264.91 lakh shares. This implies an overall subscription of 69.43X overall. The granular break-up of subscriptions was in favour of the QIB investors followed by the HNI / NII investors and the retail investors in that order. QIB bids and NII bids typically gather most of the momentum on the last day, and that was the case in this issue also in the case of QIB bids. Both the QIB and the NII bids picked momentum on the last day and added to its heft of the previous days. Here are the details of the category-wise subscription.

Data Source: BSE

Subscription status of QIB Portion

On 21st November 2023, Tata Technologies Ltd completed the bidding for its anchor allocation. There was a robust response as the anchor investors participated through the process of book building. A total of 1,58,21,071 shares were allotted to the anchor investors. The allocation was done at the upper IPO price band of ₹50 per share (including premium of ₹498 per share) which resulted in an overall anchor allocation of ₹791.05 crore. The anchors absorbed 26.00% of the total issue size of ₹3,042.51 crore.

The QIB portion (net of anchor allocation as explained above) had a quota of 105.47 lakh shares of which it has got bids for 21,453.94 lakh shares at the close of Day-3, implying a subscription ratio of 203.41X for QIBs at the close of Day-3. QIB bids typically get bunched on the last day and while the heavy demand for the anchor placement had given an indication of the institutional appetite for the Tata Technologies Ltd IPO subscription overall, the actual demand did turn to be quite robust for the IPO. Despite the large size of the IPO, the QIB response was very robust.

Subscription status of HNI / NII Portion

The HNI portion got subscribed 62.11X (getting applications for 4,913.24 lakh shares against the quota of 79.11 lakh shares). That is a relatively strong response at the close of Day-3 largely because this segment normally sees the maximum response bunched on the last day. Bulk of the funded applications and corporate applications, come in on the last day of the IPO, and that was visible as the overall HNI / NII portion added to its heft on the last day of the IPO. Apart from the QIB portion, even HNIs saw good traction on the last day.

Now the NII/HNI portion is reported in two parts viz. bids below ₹10 lakhs (S-HNI) and bids above ₹10 lakhs (B-HNI). The bids above the ₹10 lakh category (B-HNIs) typically represents most of the major funding customers. If you break up the HNI portion, the above ₹10 lakh bid category got subscribed 70.67X while the below ₹10 lakh bid category (S-HNIs) got subscribed 44.98X. This is just for information and is already part of the overall HNI bids explained in the previous para.

Subscription status of Retail Individuals

The retail portion was subscribed 16.50X at the close of Day-3, showing relatively strong appetite. It must be noted that retail allocation is 35% in this IPO. For retail investors; out of the 184.58 lakh shares on offer, valid bids were received for 3,046.17 lakh shares, which included bids for 2,613.48 lakh shares at the cut-off price. The IPO is priced in the band of (₹475 to ₹500 per share) and has closed for subscription as of the close of Friday, 24th November 2023.