New Delhi: Tata Technologies filed for Draft Red Herring Prospectus (DRHP) with the SEBI for its IPO on March 9, 2023. The firm is planning to sell up to 9.571 crore worth of shares, which represents 23.6 per cent of its paid-up share capital by the offer for sale (OFS).

The IPO is an offer for sale by its current shareholders, which includes Tata Motors, Alpha TC Holdings Pte And Tata Capital Growth Fund-I. Right now, Tata Motors has captured a 74.69 per cent stake in the company whereas Alpha TC Holdings Pte and Tata Capital Growth Fund-I hold 7.26 per cent and 3.63 stake, respectively.

Position of Tata Motor shares

As Tata Technologies register for IPO, shares of Tata Motors have been rising ever since from last two months, with its share price increasing by+ 25 per cent to Rs.512 per share from Rs.410 this time.

What do Experts have to say?

Stock Market researchers say that Tata Technologies IPO which is completely Offer for Sale(OFS) in nature, its net proceeds of the public issue will directly be going into the corpus of the firms unloading their shareholding in the company.

As Tata Motors unload its shareholding in the company, it is to be expected that the financial conditions of Tata Motors will be improving, due to which better quarterly numbers are anticipated from the auto giant in upcoming quarters. Therefore, a continued bull run is expected in Tata Motors shares and, hence, any dip in the stock would offer buying opportunities for positional investors.

Why should one buy Tata Motor shares?

Avinash Gorakshkar, head of research at Profitmart Securities, speaking about why Tata Motors shares are in the bull trend, said, “Tata Motors Ltd would be a direct beneficiary of Tata Technologies IPO as the auto company is offloading its stake in Tata Technologies that it acquired at ₹7.40 apiece (as mentioned in the DRHP). As Tata Technologies IPO is completely OFS in nature, net proceeds of the public issue would go to the corpus of Tata Motors instead of Tata Technologies. Hence, the IPO is expected to boost the balance sheet of Tata Motors instead of Tata Technologies. Therefore, market is expecting improvement in the financial of Tata Motors and better quarterly numbers in upcoming quarters.”