Financial Daily from THE HINDU group of publications
Tuesday, Jul 20, 2004
Info-Tech - IPOs
TCS pegs IPO in Rs 775-900 band
Mumbai , July 19
TATA Consultancy Services (TCS) on Monday announced the price band for its initial public offer at Rs 775-Rs 900. The IPO is scheduled to open on July 29 and close on August 5.
Over 55 lakh equity shares with a face value of Re 1 are on offer. The minimum lot that investors can apply is seven shares.
The price band is below market expectations. Market participants were expecting the IPO to be priced in the Rs 900-Rs 1,000 range.
"If the investment horizon is over a year, the pricing seems fair. But if the investment objective is to exit before March 2005, at the upper end of the pricing, it may not be a profitable buy," said Mr Chetan Shah, an analyst on IT companies with Quantum Securities.
"The price earning multiple of TCS should come at a discount to that of Infosys. The book building is likely to go up to Rs 850 (approximately). It certainly is not a cheap valuation. The appetite for IT scrips is currently high, especially for foreign institutional investors. IT will be an out-performer this year, contingent on the US economy. For the retail investor, anything over Rs 850 seems to be slightly expensive," said Mr Vivek Pandey, Equity Analyst, Anand Rathi Securities.
The markets are confident that the issue would be a success. "The IPO would be well received, it's a glamour issue," said a leading broker at the BSE.
Sixty per cent of the offer has been earmarked for qualified institutional buyers, less than 15 per cent for non-institutional bidders and the remaining 25 per cent would be for retail investors.
According to analysts, post the IPO, the Tata group market capitalisation would jump from its current levels of Rs 57,664 crore to cross the Rs 100,000-crore mark.
The initial red herring prospectus was filed with Securities and Exchange Board of India on June 1. TCS is expected to start its roadshows for the offer shortly. The roadshows would cover Indian and international locations, according to company sources.
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