The Tata Consultancy Services' (TCS) initial public offering (IPO), which was slated to hit the markets this year, appears to have been deferred.
The reasons being cited by insiders are a languishing stock market and considerable image erosion of the group in the wake of the Tata Finance debacle. An official spokesperson for the company refused to comment on the issue.
"The core group in Tata Sons that is responsible for such decisions is busy unraveling the Tata Finance mess," said sources.
They also pointed out that, though the company was involved in the necessary ground work in terms of hiving off TCS from Tata Sons, as of today, the IPO process has not begun.
TCS, which is a division of Tata Sons, will be made into a 100 per cent subsidiary before the float. The issue size that the company has in mind is in the range of Rs 4,000-5,000 crore.
Analysts said, the Tata Finance stigma apart, the market is not conducive to any premium issue at the moment and the situation is not likely to look up in the coming months. "This is not the time for a mega issue like the one being considered by TCS," said analysts.
The TCS case cannot be taken in isolation as far as IPOs are concerned. Public sector banks are also going slow with their IPO plans. The banks decided to announce their IPO intentions after the Punjab National Bank issue was well received and it was widely expected that the stock market conditions would improve.
However, with the drought hanging overhead and its dramatic impact on the markets, banks are now rethinking their strategy and may defer their IPO plans.
The major indices of the country have been reeling under bear assault for some time now. The Bombay Stock Exchange (BSE) Sensex closed down 59.39 points, or 1.97 per cent, at 2950.09 and the National Stock Exchange Nifty closed down 15.55 points, or 1.60 per cent at 953.55, today.
Analysts said, some technical levels have been breached today and if 2930 is breached, further selling could take place.
The last major IPO was the i-flex issue which is now trading below the IPO price of Rs 530 per share. The scrip closed at Rs 487 on the BSE and saw a volume of 4,150 shares today.
