Tata Technologies IPO: 10 Key Insights into the Group’s Historic Public Offering After Two Decades”
Here are 10 key things to know before subscribing to the offer:
1) IPO Dates
The IPO will open for subscription on November 22, 2023, and close on November 24, 2023.
2) Price Band
The price band for the issue has been fixed at Rs 475-500 per share. At the upper price band, the company’s valuation stands at Rs 20,283 crore.
3) Offer Details
Tata Tech plans to raise Rs 3,042.51 crore via public issue at the upper price band. The issue comprises only an offer-for-sale (OFS) by the promoter and investors. Promoter Tata Motors will offload 4.62 crore equity shares worth Rs 2,314 crore in the OFS. Investors Alpha TC Holdings Pte Ltd will be selling 97.17 lakh shares worth Rs 486 crore, and Tata Capital Growth Fund I will 49 lakh shares worth Rs 243 crore. The company has reserved 20.28 lakh shares for its employees and 60.85 lakh shares for the shareholders of Tata Motors. The IPO excluding shares reserved for employees and Tata Motors shareholders is the net issue. The anchor book will open for a day on November 21.
4) Objectives of Issue
Since the offer is entirely an OFS, Tata Technologies will not receive any money from this issue. Instead, all the proceeds will go to the selling shareholders.
5) Lot Size
Investors can bid for a minimum of 30 equity shares and multiples of 300 after that. Hence the minimum investment by retail investors would be Rs 14,250 (30 (Lot size) x 475 (lower price band)). At the upper end, the bidding amount will increase to Rs 15,000.
6) Company Profile
Tata Motors’ subsidiary Tata Technologies is a global engineering services company offering product development and digital solutions, including turnkey solutions, to global original equipment manufacturers (OEM) and their tier 1 suppliers. Tata Tech is a pure-play manufacturing-focused engineering, research and development (ER&D) company, primarily focused on the automotive industry. The company’s education business provides ‘phygital’ education solutions in manufacturing skills including upskilling and reskilling in relation to the latest engineering and manufacturing technologies to public sector institutions and private institutions and enterprises through curriculum development and competency centre offerings through iGetIT platform.
7) Financials
The company reported 42.8 percent on-year growth in consolidated net profit at Rs 624 crore for the year ended March 2023 and a 25 percent rise in revenue from operations at Rs 4,414.2 crore during the same period. In the six-month period ended September FY24, profit surged 36 percent to Rs 351.9 crore and revenue increased by 34 percent to Rs 2,526.7 crore compared to year-ago period.
8) Lead Managers
The book-running lead managers to the issue are Jm Financial, Citigroup Global Markets India and Bofa Securities India while Link Intime India is the registrar.
9) Risks
(i) Tata Tech’s top two captive customers, TML and JLR, account for roughly 40% of its TOI, posing a significant revenue concentration risk for the company.
(ii) Revenues are highly dependent on clients concentrated in the automotive segment.
(iii) The company expect a significant amount of future revenue to come from new energy vehicle companies, many of whom may be startup companies. Uncertainties about their funding plans, future product roadmaps, ability to manage growth, creditworthiness and ownership changes may adversely affect the business.
(iv) The company had negative cash flows in the past and may continue to have negative cash flows in the future, which could adversely affect the liquidity and operations.
10) Listing Date
The trading of Tata Technologies’ shares on the bourses will commence with effect from December 5, as per the IPO schedule.
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