Tata Capital, India's third-largest non-bank lender by revenue, was muted in its debut trade on Monday, valuing the firm at 1.4 trillion rupees ($15.78 billion), with investors seemingly not that keen on the first listing by the storied Tata Group in nearly two years.
Tata Capital's subdued debut has come in a busy IPO market, where analysts say investors appear to be favouring LG Electronics India's $1.3-billion share sale as they expect stronger listing gains and near-term growth, helped by recent tax cuts.
As of 10:57 am, Tata Capital shares traded at 329.8 rupees, slightly higher than their offer price of 326 rupees. Its market capitalization at the current price trails Bajaj Finance and Jio Financial Services, which are valued at $72 billion and $22 billion, respectively.
Tata Capital's IPO was fairly priced but the lack of a major valuation discount to its listed peers was one of the key factors for the tepid response, said Ambareesh Baliga, an independent market analyst.
"This is probably the first time we have seen such muted demand for an IPO from Tata Group," Baliga said.
Strong interest in LG Electronics India's IPO and negative news surrounding the Tata Group, including boardroom turmoil, also weighed on demand for Tata Capital's share sale, said Dhiraj Relli, CEO at HDFC Securities.
Last week, while Tata Capital got bids worth $2.9 billion for its IPO, LG Electronics India's public issue, which opened a day later, received nearly $50 billion worth of bids.
LG will start trading on October 14, while WeWork India, which made its debut last week, fell as much as 5.2% as investors stayed wary of its steep valuation and governance risks.
The last IPO from the salt-to-software Tata Group was by engineering and technology services provider Tata Technologies in November 2023, which listed at a premium of 140% to its issue price.
