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How to Take a Position After TATA Technologies IPO

 TATA Technologies IPO
Cristian Cochintu
Cristian Cochintu
20 November 2023

Initial Public Offerings (IPOs) are how many companies go public, and there are several ways to take a position. Discover how to get exposure to TATA Technologies IPOs with us.

Tata Technologies Limited, a wholly-owned subsidiary of Tata Motors Limited, is poised to become the first company within the Tata Group to go public in almost twenty years. This marks the first IPO from the Tata Group since TCS went public in 2004. 

How can you get exposure to the TATA Technologies IPO?

With us, you can get exposure to the TATA Technologies IPO after the listing by trading CFDs with our secondary market.

Secondary market: trading shares after the TATA Technologies IPO

At present, India does not allow foreign individuals to invest directly in its stock market; however, many of them are listed directly on U.S., UK, and EU-based exchanges via American Depositary Shares (ADS) and Global Depositary Receipts (GDRs), making it more accessible for retail investors to get exposure to Indian markets, including TATA Technologies.  

ADRs are denominated in dollars and subject to the regulations of the U.S. Securities and Exchange Commission (SEC). Likewise, global depositary receipts are listed on European stock exchanges. However, for example, many promising Indian firms are not yet using ADRs or GDRs to access offshore investors.

Once TATA Technologies has been listed, the secondary market will open. This is when you can trade on TATA Technologies share’s price movements with derivatives.

To trade on the secondary market, you’ll use CFDs. With these leveraged products, you won’t own the shares when you trade, but you’ll be able to go long if you think TATA's share price goes up or short if you think TATA's share price goes down.  

With us, you can take a position on the secondary market as soon as TATA Technologies is listed on a specific exchange and prices from the exchange become available to our liquidity providers.

Make sure you always have an effective risk management strategy in place when trading an IPO, as the share price could experience increased volatility right after the listing.

TATA Technologies IPO Trading Steps

  1. Learn how IPOs work
  2. Research and evaluate TATA Technologies
  3. Decide how to take a position on TATA Technologies IPO
  4. Build your trading plan and strategy
  5. Open your position

1. Learn how IPOs work

Long before the shares list on a stock exchange, the IPO process begins. A corporation must first decide whether to go public. A corporate financial audit and the registration procedure come next. A few months prior to the scheduled listing, word of an upcoming IPO is typically made public. This allows you time to review the company's financials and determine whether to invest in its shares.

Tata Technologies Limited, a subsidiary of Tata Motors Limited had filed a draft red herring prospectus (“DRHP") dated March 9, 2023, with the Securities and Exchange Board of India for an initial public offering (“IPO").

The company informed in an exchange filing on November 13. The TATA Technologies IPO is an Offer For Sale (“Offer") of up to 60,850,278 equity shares for cash (“Equity Shares"), comprising of an offer for (a) up to 46,275,000 Equity Shares by the Company; (b) up to 9,716,853 Equity Shares by Alpha TC Holdings Pte. Ltd.; and (c) up to 4,858,425 Equity Shares by Tata Capital Growth Fund I, each representing up to 11.41%, 2.40%, and 1.20%, respectively of the paid-up Equity Share Capital of Tata Technologies Limited.

2. Research and evaluate TATA Technologies

Before investing or trading the TATA Technologies IPO, it’s useful to do your research about the company. Here are some questions to ask before investing in TATA Technologies:

What is the business model of Tata Technologies?

About 60% of Tata Technologies' total revenue comes from its engineering services division. This is the company's main source of income. In this market category, the company's principal customers are Airbus, Jaguar Land Rover, and Tata Motors. The company's product development division generates the remaining revenue by creating goods like automobile components and introducing novel business strategies to alter the competitive environment. One such strategy is to directly license its technology to OEMs and cloud computing firms.

What are the strengths of investing in TATA Technologies IPO?

Deep expertise in the automotive industry

The company's approach to assisting clients in using digital technology is supported by its thorough grasp of client requirements and its expertise in the automotive area.  

Differentiated capabilities in new age automotive trends

They employ end-to-end EV development, production, and after-sales services solutions that are developed to support OEMs in creating competitive EVs while balancing timeliness, quality, and cost.

Strong digital capabilities bolstered by proprietary accelerators

Their line of digital services and accelerators is intended to assist tier-1 suppliers and OEMs in managing the full life cycle of digital products and involving customers at every stage of the product experience.

What are the risks of investing in TATA Technologies IPO?

Revenues are highly dependent on clients concentrated in the automotive segment 

Due to the concentration of clients in the automotive sector, clients may decide to cut back on their use of the services the company provides if automotive demand softens due to slower economic growth in important markets or other factors. This could have a materially negative impact on the company's business.

Any inability to manage our growth could disrupt business and reduce profitability 

Both business and employee numbers have increased dramatically over time. They have faced and anticipate continuing to confront obstacles because of expanding their business. Any failure to carry out necessary tasks in a timely and effective manner to support operations could have a negative impact on business and lower profitability.

3. Decide how to take a position on TATA Technologies IPO

With us, you can take on a position on the company’s share price on the secondary market with derivatives like CFDs.

Trading derivatives

You can create a leveraged trading account and predict TATA Technologies share’s price movements with derivatives like CFDs, similar to trading stocks like Apple or Tesla.  

With CAPEX.com you can trade up to 2,000 CFDs on shares, including some of the best stocks in 2023 by return, top European stocks listed on Euronext and other local exchanges, as well as Chinese stocks and other fast-growing Asian markets.

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Besides shares, you can trade CFDs on indices, ETFs, commodities, bonds, forex, and cryptocurrencies.

Derivatives enable you to open a position with leverage, which requires a small deposit (margin) rather than committing the full value of the shares upfront. This can magnify profits and losses, as both will be calculated from the full exposure of the trade, not just the margin you put up a deposit.

4. Build your trading plan and strategy

We’ve highlighted some TATA Technologies IPO trading strategies below. Remember that before using any of these strategies, you should take steps to manage your risk.

Let the stock establish some price discovery

Taking a position on the TATA Technologies IPO on its opening day can be very different compared to other market opportunities. Support and resistance levels haven’t been established yet and people are often excited with certain expectations. One of the best ways to handle hot IPOs is to wait for the morning volatility to cool off and allow the stock to establish some ‘price discovery‘.

This will give you levels to trade off and price action will likely be less erratic and volatile. Having levels to trade off helps you manage risk, which is your number one goal when trading the TATA Technologies IPO and any other upcoming IPOs. Placing a stop-loss order and managing trade size is a must.

Wait for the lock-up period to end

There is sometimes a "lock-up" period for IPO shares and can apply to TATA Technologies shares also. These prohibit current shareholders from selling their shares right away following a listing and can extend for up to six months. After this time, if you see that they are hanging onto their shares, it may indicate that investors believe there is room for growth and that now is a good time to invest because the price of the TATA Technologies stock may rise or consolidate.

However, if the share price drops following the lock-up period, it can be a sign of low investor confidence in the TATA Technologies business. This could be a chance to use CFDs to go short.

By using this technique, you will not experience the first market volatility that initial public offerings (IPOs) typically bring about. Depending on your own risk tolerance, this may or may not be a positive thing. It is not impossible to combine these tactics. On the day of the TATA Technologies IPO, you may potentially trade the volatility of the secondary market using derivatives like CFDs.

Take a position on TATA Technologies stocks with derivatives

If you want to trade on upward and downward movements in TATA Technologies’ share price on the day of its IPO, you could take a position with derivatives like CFDs. You can use these products to ‘buy’ (go long) if you think the TATA Technologies’ share price will rise, or ‘sell’ (go short) if you think it’ll fall.

But bear in mind that CFDs are leveraged products, and leverage can increase both your profits and your losses.

5. Open your first position

Once you’re ready to start trading shares, you can open your first TATA Technologies IPO position. Remember that with us you can take a position on TATA Technologies IPO shares via CFDs on the secondary market, as soon as TATA Technologies is listed on a specific exchange and prices from the exchange become available to our liquidity providers.

Before you open your TATA Technologies IPO position, make sure you take steps to manage your risk like adding stops and limits to your open positions, and by monitoring your positions closely.

How to Trade TATA Technologies CFDs on CAPEX.com

You can open a CFD on ETF position with CAPEX.com through the device of your choice, be it a smartphone, PC, or tablet. It’s straightforward:

  1. Log in to your account or create account
2. Go to the Shares section and search "TATA"3. Choose direction (Buy or Sell) based on your assessment 4. Set your trade size, Stop Loss and Take Profit 5. Place and monitor your trade!

Free Resources

Before you start investing and trading in the TATA Technologies IPO, you should consider using the educational resources we offer like CAPEX Academy or a demo trading account. CAPEX Academy has lots of free trading courses for you to choose from, and they all tackle a different financial concept or process – like the basics of analyses – to help you become a better trader or make more informed investment decisions.  

Our demo account is a suitable place for you to learn more about leveraged trading, and you’ll be able to get an intimate understanding of how CFDs work – as well as what it’s like to trade with leverage – before risking real capital. For this reason, a demo account with us is a great tool for stock investors who are looking to make a transition to leveraged trading.

FAQs about TATA Technologies IPO

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Cristian Cochintu
Cristian Cochintu
financial_writer

Cristian Cochintu writes about trading and investing for CAPEX.com. Cristian has more than 15 years of brokerage, freelance, and in-house experience writing for financial institutions and coaching financial writers.