Tata Tech's GMP Falling Because Of This Key Factor: Details Here

Investors in Tata Technologies are closely watching developments as the company’s second-largest client, Vietnamese electric vehicle (EV) manufacturer VinFast, experiences a significant 90% plunge in its stock price.

What Happened: The rollercoaster ride began when VinFast went public in the US in August, witnessing a staggering 700% surge in its shares within a few weeks. However, concerns have escalated as its market value tumbled over 90% from those peak levels.

Worries over VinFast’s related party-driven electric vehicle sales, high valuations and a decline in customer traction have been reflected in Tata Technologies’ grey market premium (GMP), which dropped from over ₹400 to around ₹375 on Wednesday.

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Why It Matters: VinFast plays a crucial role for Tata Technologies, contributing a significant 20%-25% of the company’s revenue from Vietnam. Despite the substantial value erosion in VinFast’s stock, Tata Technologies had been taking proactive measures to reduce dependence on key clients and diversify its customer base.

While the news about VinFast has raised some concerns, experts suggest that it may not pose a significant threat, given that VinFast is not a mass producer, having manufactured only 24,000 units in the last year and around 11,300 units in the first half of 2023.

As Tata Technologies gears up for its IPO listing on December 5, uncertainties linger about the potential impact of VinFast’s struggles on the company’s market debut. While the grey market premium can provide insights, it may not be the sole determinant of the listing’s outcome.

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