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News: Tata motors subsidiary in the E&RD domain i.e., Tata Technologies to list today. Media articles indicate strong grey market premium to the IPO price (₹500/share) with potential listing expected at ₹850-900/share.
Views: This is a big value unlocking event which we have been highlighting for long at Tata Motors. In Oct 2023 Tata Motors divested 10% stake in Tata Technologies for ₹ 1614 crore (@₹400/share to TPG PE fund as well as Ratan Tata endowment fund) while it divested 11.4% stake for ₹ 2314 crore via the present IPO route (@₹500/share). Tata Motors residual stake in Tata Technologies post these recent transactions now stands at 53.4% which at the IPO price (₹ 500/share) is valued at ₹ 10,830 crore and potential listing price (₹ 850-900/share) is valued at ₹ 18,400-19,500 crore. With ~₹ 4,000 crore as cash inflow into Tata Motors and residual stake valued of ~₹18-19k, we get further ~₹15/share upside to our target price. With stock up 13% in the past month, we expect positive sentiments to weigh on Tata Motors stock price going forward.
Impact: Positive