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Sebi Approves Tata Technologies IPO, Marking Tata Group's First Public Issue in 20 Years

Tata Technologies IPO Gets Green Light from Sebi, First Tata Group Offering in Nearly Two Decades

28 June 2023

|

Kunal Tyagi

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  • Tata Technologies, a subsidiary of Tata Motors, has received SEBI approval for its initial public offering (IPO) after nearly two decades.

  • The IPO will consist of a complete offer for sale (OFS), with selling shareholders offloading up to 9.57 crore units, representing 23.60% of the company's paid-up share capital.

  • Tata Technologies specializes in engineering services, focusing on product development and digital engineering solutions for manufacturing-led verticals, with a strong presence in the automotive sector.

After nearly two decades, the Tata Group is set to make a grand return to the public market with the approval of the initial public offering (IPO) of Tata Technologies by the Securities and Exchange Board of India (SEBI). The IPO, which is a complete offer for sale (OFS), will see the selling shareholders offloading up to 9.57 crore units, representing 23.60% of the company's paid-up share capital. This highly anticipated IPO is the first public issue from the Tata Group since the successful listing of Tata Consultancy Services (TCS) in 2004.


Company Profile and Expertise:


Tata Technologies, a subsidiary of Tata Motors, is a pure-play engineering services firm specializing in product development and digital engineering solutions focused on manufacturing-led verticals. With a strong presence in the automotive sector, the company derives the majority of its revenue from this vertical, with Tata Motors and Jaguar Land Rover as its anchor clients. The company's areas of expertise include product engineering, manufacturing engineering, software, and embedded engineering, positioning it among peers like KPIT Tech, Tata Elxsi, and L&T Tech Services.


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Diversification and Revenue Streams:


Apart from its core engineering and research and development (R&D) services, Tata Technologies also operates businesses in the products and education segments. The products business involves reselling third-party software along with value-added services, while the education business offers manufacturing-related skill development through its proprietary iGetIT platform and competency centers. These additional revenue streams contribute to the overall growth and stability of the company.


Financial Performance and Outlook:


Tata Technologies has demonstrated robust financial performance, with consistent revenue growth and improving profitability. For the nine months ended December 2022, the company reported revenue from operations of Rs 3,011.79 crore, representing a 15.5% increase compared to the same period in the previous year. Net profit for the corresponding period stood at Rs 407.47 crore. The company's adjusted EBITDA margins have also shown steady improvement, reaching 19.20% in 9MFY23.


IPO Details and Market Expectations:


While the exact size of the IPO has not been disclosed, industry insiders estimate that the issue could be worth at least Rs 4,000 crore. The price band for the IPO will be determined based on market demand for the equity shares offered through the book-building process. The IPO allocation is expected to reserve 50% for qualified institutional buyers (QIBs), 35% for retail investors, and 15% for non-institutional investors. Given the anticipation surrounding the Tata Technologies IPO, market experts believe it will generate significant interest and be closely watched by investors.


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