Tata Tech's m-cap tops that of sister co Elxsi, L&T Tech & KPIT on Day 1
company's market value crossing ₹53,000 crore on Thursday, higher than that of some of its listed mid-cap peers such as KPIT Technologies and L&T Technology Services.
Analysts said the 163% surge on the opening day has made Tata Technologies a more expensive bet than some of these rivals with a more diversified client base. But the bet could pay off if investors have the patience to hold the stock for a longer period, they said.
Tata Technologies listed at ₹1,199.95 on Thursday, up 140% over its IPO price of ₹500 apiece before closing at ₹1,314.25.
The stock hit a high of ₹1,400 earlier in the day. Analysts said euphoria over the first IPO by a Tata Group company in 20 years and relatively cheap valuations in the IPO have driven the frenzy on debut.
But, after the first-day spike, the stock is no longer cheap, claim analysts.
The price-to-earnings (PE) ratio — a popular valuation measure — of Tata Technologies is at around 85 times FY23 earnings. In comparison, L&T Technologies is trading at 42 times, Persistent Systems is at 50 times and group peer Tata Elxsi is at 65 times.
«L&T Technology Services is a better bet since it has a net profit margin of 14.65% against Tata Tech's 14.13%, but has twice the revenue and no industry concentration risk,» said Dharan Shah, founder of Tradonomy.com, a Mumbai-based investment advisory.
«It is also valued cheaper with only 27% free float,» said Shah. L&T Technology with a market cap of a little over ₹50,000 crore rose 1.9% to ₹4,766.30 on Monday.
Tata Technologies, owned by Tata Motors, offers product development and digital solutions to the automobile sector.
Sumit Pokharna, vice president at Kotak Securities prefers KPIT Technologies as the company's earnings are projected
