Tata capital rises in debut after India’s biggest IPO of year

The stock opened at 330 rupees in premarket trading, 1.2% higher than its price in the IPO.

Tata Capital advanced in its Mumbai trading debut after the shadow lender wrapped up its 155-billion-rupee ($1.7 billion) initial public offering, India’s biggest this year.

The stock opened at 330 rupees in premarket trading, 1.2% higher than its price in the IPO, the country’s largest since Hyundai Motor India Ltd.’s record $3.3 billion deal last year. The offering attracted funds managed by Morgan Stanley and Goldman Sachs Group Inc. among its anchor investors.

Tata Capital, a unit of India’s oldest conglomerate, kicks off what is going to be a big week for debuts in the country as shares of LG Electronics Inc.’s local unit are scheduled to start trading on Tuesday. Their performance on opening day will be closely watched as scores of Indian companies prepare to go public and raise billions of dollars in India’s increasingly hot IPO market.

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The company is positioned for long-term growth, backed by a strong brand and a widening network of branches across India, Indian brokerage Choice said in a note. But given that some of its measures like return on assets are lower than those of peers, the broker only recommended the stock as a long-term investment, it said.

Tata’s listing comes amid India’s growing status as a global fundraising hub, powered by deep domestic liquidity and an expanding retail investor base. The country has become one of the busiest IPO markets worldwide over the past two years, drawing global investors eager to tap its fast-growing consumer economy. October is shaping up to be India’s biggest month ever for companies going public — with proceeds expected to top $5 billion.

Tata Capital, which had nearly 1 500 branches as of the end of March, attracted global and domestic institutional investors in the IPO, and the offering was sold out on the final day of bidding. That’s in spite of strains faced by local non-bank lenders in recent quarters. But things may be looking up for the industry after India announced measures designed to benefit the industry.

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More broadly, India has emerged as the world’s fourth-largest IPO market this year, with proceeds exceeding $11 billion in the first nine months of the year, according to data compiled by Bloomberg. That’s after last year’s record of almost $21 billion.

Kotak Mahindra Capital Co, Axis Bank, HDFC Bank, ICICI Securities, IIFL Capital Services, SBI Capital Markets and local units of BNP Paribas SA, Citigroup, HSBC Holdings Plc, and JPMorgan Chase & Co managed Tata Capital’s IPO.

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