Tata Tech down red

Tata Tech is the top loser on the BSE currently mainly on the back of a large block deal.

Reportedly, 1.6 crore shares of the company changed hands at a per-unit price of Rs.683.

TPG (Texas Pacific Group), one of the early private equity investors in Tata Technologies, is selling a part of its stake via a block deal today. It is said to be selling around 3.95% stake and the deal is said to be worth around Rs.1100 crore. The floor price is at a 3.25% discount to yesterday’s closing, typical for such large exits.

Selling by a big institutional investor (even if planned) usually triggers short-term price pressure.

What is important to note here is that TPG’s exit is financial, not operational, as the company’s business fundamentals haven't changed.   

Tata Motors still owns a large majority, 65% stake in Tata Tech.

There is no strategic partner exits, no management changes; it’s a normal private equity monetization event.

TPG Asia (through its affiliate company) held about 9.9% in Tata Technologies and this stake came from an investment TPG made when Tata Motors was carving out and preparing Tata Tech for growth independently.

TPG will still hold a small stake and this is not a complete exit.

The stock, which had closed yesterday at Rs.705.95, opened lower today at Rs.685 and went down further to Rs.662.75. Its 52-week low is at Rs.595.