Tata Capital IPO: Vikas Khemani on FOMO in unlisted markets

Tata Capital Ltd’s mammoth Rs 15,512-crore initial public offering (IPO) is set to become the largest-ever listing from the Tata Group and the biggest by any non-banking financial company (NBFC) in India. The IPO, which opens for public subscription on Monday, 6 October, carries a price band of Rs 310-326 per share, with a lot size of 46 shares.

The issue has already generated significant investor buzz, with the anchor book raising Rs 4,642 crore from 68 marquee domestic and global institutional investors. Reports suggest that the anchor portion was oversubscribed nearly five times, signaling strong demand and confidence in Tata Capital’s diversified lending portfolio across retail, SME, and housing finance.

However, Carnelian Asset Advisors founder Vikas Khemani cautioned investors against succumbing to FOMO. In a tweet on 4 October, he wrote, “Tata capital IPO priced @ 326 per share. Many investors have bought in unlisted space as high as Rs 1050 over last few years. They wouldn’t break even over next 5 years. This is the downside of doing investments without using brain or understanding or out of FOMO.”

 

He added, “Even in a good company with high governance, without understanding, investors can lose money. #RiskReward must be understood before investing. Most important aspect of investing - Do what you understand, understand what you do!”

The IPO comprises a fresh issue of 21 crore shares and an offer for sale (OFS) of approximately 26.6 crore shares. Allotment is expected on Thursday, 9 October, with shares credited to successful bidders’ demat accounts by Friday, 10 October, and listing scheduled on BSE and NSE for Monday, 13 October. The grey market is already showing a premium of Rs 24-26 per share, suggesting potential gains of around 8 per cent for early investors.

Tata Capital’s IPO follows closely on the heels of Tata Technologies’ Rs 3,042-crore listing in November 2023 and marks the second major Tata Group public offering in two years. Tata Sons, the promoter, currently holds 88.6 per cent of the company’s fully diluted share capital, with a board of eight directors, including one executive and seven non-executive directors.