Financial Daily from THE HINDU group of publications
Thursday, Aug 26, 2004
Info-Tech - Stocks
Markets - IPOs
TCS shares close at 16% premium on debut
Mr Ratan Tata, Chairman, Tata Consultancy Services Ltd, and Mr S. Ramadorai, Managing Director, look at the TCS shares being listed on the National Stock Exchange in Mumbai on Wednesday. - Paul Noronha
Mumbai , Aug. 25
TATA Consultancy Services made its debut on the two premier stock exchanges on Wednesday, closing around 16 per cent higher than the issue price of Rs 850 per share discovered through book building on a price range of Rs 775 to Rs 900 per share.
TCS closed at Rs 987.95 on the NSE and at Rs 987.50 on the BSE, where it also topped in the number of trades at 1.22 lakh. At start of trade, the scrip quoted at Rs 1,198.7 on the NSE and at Rs 1,050 on the BSE.
"We underestimated the enthusiasm of investors; we hope this issue will give them great happiness in terms of growth," the TCS Chairman, Mr Ratan Tata, said at the scrip's debut ceremony at the NSE here. The listing puts TCS among the top three in terms of market capitalisation in the country, said Mr Hemendra Kothari, Chairman, DSP Merrill Lynch. The total subscription amount was in the region of Rs 40,000 crore; of this, Rs 20,000 crore was from the retail segment alone, he said.
"TCS is the second-most valuable company in IT services (globally) in market capitalisation and the biggest company of the Tata group in market cap. The IPO has enthused retail investors so much that 12.5 lakh applications were received in the retail sector," Mr Mihir Joshi, MD, Morgan Stanley said, at the listing ceremony at the BSE.
The scrip has been "directly listed in A group" and from Wednesday itself derivatives, both future and options, will be introduced, announced Mr Manoj Vaish, Executive Director and CEO, BSE.
The listing of the company will enhance TCS's profile globally and act as a currency for its growth plans and for meeting employee expectations, said Mr S. Ramadorai, Managing Director. "The company's 30,000 employees can now be rewarded in the form of stock options." He said the overseas listing would happen "at a later stage." There was oversubscription to the issue from retail investors to the extent of 2.91 times, from qualified institutional buyers at seven times, and from non-institutional investors at 19 times. The subscription level from employees of the company was 77 per cent.
Overall, the offer of 55.4 million shares was subscribed 7.7 times, allowing the exercising of the greenshoe option of 8.31 million shares. The offer and greenshoe option amount to Rs 5,420 crore.
According to Mr Amit Chandra, MD, DSP Merrill Lynch, the IPO would add nearly 4 per cent to India's market capitalisation.
The Tata group will consider merger of the information technology companies in its fold "only if it is in the interests of TCS as well as those companies and if it makes sense," said Mr Ratan Tata, in reply to a question.
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