Under the IPO, Tata Motors intends to sell 81,133,706 shares of its subsidiary. Two other shareholders - Alpha TC Holdings and Tata Capital Growth Fund I - of the company are also selling shares in the offer.
Chakri Lokapriya, CIO & MD, TCG AMC, said the IPO would not move the needle much for Tata Motors, but its balance sheet will become stronger as a result of the cash inflow from stake sale.
From a valuation perspective, it would be easier to value the company if it is in a single line of business.
"The IPO in itself is a good thing. It is an attractive company in an area where there is a very growing interest in the US and in the advanced markets," he said.
Tata Tech's DRHP shows that the average cost of acquisition for Tata Motors is just Rs 7.40 per share. For Alpha TC and Tata Capital Growth Fund, the figure comes in at Rs 25.10 per share.
"Our company will not receive any proceeds of the offer for sale by the selling shareholders. Each of the selling shareholders will be entitled to the respective proportion of the proceeds of the offer for sale after deducting their portion of the offer related expenses and the relevant taxes thereon," Tata Tech said.
The price band for the IPO will be determined in consultation with the book-running lead managers based on the assessment of market demand for the equity shares offered through the book-building process.
The basic earnings per share (EPS) stood at Rs 10.77 per share in FY22. In the nine months ending December 2022, the company reported a revenue of Rs 3,011.8 crore, up 15.5% on a year-on-year basis, while the profit came in at Rs 407.5 crore.
Tata Technologies IPO: What it means for Tata Motors investors - The Economic Times
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