Sharekhan - Tata Technologies IPO Note

At the IPO price band of Rs. 475-500/share per share, the offer is valued at 32.5x/30.9x its FY23 EPS at the upper and lower price band. The issue price is at a steep discount of 69%/53% to its peers KPIT/Tata Elxsi on FY23 financials. At annualised EPS (based on H1FY24 PAT) the IPO is valued at 28.8x its FY2024E EPS. The Tata Group is coming out with an IPO after a gap of almost two decades and the IPO seems reasonably priced versus peers and offers favorable risk reward for the investors. Tata Technologies' future outlook is promising given its proven track record, established capabilities in ER&D services, and focus on adjacencies of Aerospace & TCHM (transport and construction heavy machinery).

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