Fundamental valuation of TCS IPO

Discussion in 'Initial Public Offers (IPO's)' started by Neal, Jun 16, 2004.

  1. Neal

    Neal Member

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    Tata Consultancy Services (TCS) has filed the draft prospectus for its much-awaited initial public offering (IPO), with the Securities and Exchange Board of India (SEBI). Sources disclosed that the company is looking to go public sometime in July. The total amount which is expected to be raised through the issue is said to be in the range of Rs 6,000 crore -Rs 7,000 crore.

    Tata Sons director Inshaat Hussein, though confirmed the filing of the draft prospectus at SEBI refused to divulge anything about the time frame and said that the prospectus is a step towards the IPO and the launch would depend on stock market conditions.

    The companys main promoter, Tata Sons and its group companies like Tata Motor, Tata Power, various Tata Trusts and construction baron Shapoorji Pallonji are expected to dilute their holding in TCS through the book building public issue by offering around 14 percent of its equity shares to local and foreign investors through a book-building issue in the domestic market.

    A total of 6.3 crore shares of face value of Rs one will be on sold. Of the 6.3 crore shares, the number of new equity shares is 2.27 crore. Excluding the green-field option of .8 crore, of the 5.54 crore shares on offer, 4.99 crore shares will be offered to retail investors, high net worth investors and qualified institutional buyers. TCS employees are expected to be allotted around 55 lakh shares. The total equity capital of the company consists of 45.5 crore shares, which would be increased to 47.83 crore post IPO.

    TCS is expected to cross Rs 7,000 crore mark in 2003-04. The post-issue valuation of the company could be around $10 billion. The exact valuation would depend on the final pricing. It is also expected that TCS is likely to be de-merged and corporatized as an independent entity contingent upon the IPO. The Bombay High Court has already approved the scheme of arrangement between Tata Sons and TCS, which will result in transfer of the division to Orchid Prints that has been renamed as TCS Ltd.

    The IPO would provide an opportunity for Tata Sons and its shareholders to realize the value of their holdings through the sale of their shares after TCS gets listed. DSP Merrill Lynch, JM Morgan Stanley, JP Morgan, and Kotak Mahindra Capital Company are likely to be the lead-managers for the IPO.
     
  2. Neal

    Neal Member

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    TCS IPO in Rs 775-900 price band

    TCS IPO in Rs 775-900 price band

    July 19, 2004 18:08 IST


    Tata Consultancy Services' initial public offer will open on July 29 with a price band of Rs 775 to Rs 900 per share of a face value of Re 1, informed sources said.

    TCS vice president (corporate communication), Atul Takle told PTI from Mumbai: "We have filed with the Registrar of Companies... and the price band for the IPO is Rs 775 to Rs 900."

    He, however, did not comment on the launch date of the IPO, the biggest public issue in the private corporate sector that could help Tatas mop up about Rs 5,000 crore (Rs 50 billion).

    The roadshows for the issue would commence from July 21 and the Tatas' team for these promotional shows could include Tata supremo Ratan Tata and TCS chairman S Ramadurai.

    Sources associated with the IPO process told PTI that there would be as many as 24 roadshows for the issue commencing on July 29, which coincides with the 100th birth anniversary of J R D Tata.

    TCS will offer 5.54 crore (55.4 million) equity shares of Re 1 each, including a fresh issue of 2.27 crore shares, in its initial public offering through a book building route.
     
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