Established in 1994, Tata Technologies functions as a subsidiary of Tata Motors and stands as a prominent global engineering services firm, excelling in its field. The company specializes in offering diverse product development and digital solutions, mainly concentrating on streamlining operations. Its primary focus spans the automotive, aerospace, and industrial heavy machinery sectors, actively engaging in manufacturing-oriented engineering and R&D activities. Stock market advisory recommends few essential stocks and Tata Tech is one of them.
The forthcoming Tata Technologies IPO, operating under the umbrella of Tata Motors Limited, emphasizes its dedication to product development and digital solutions, catering to global original equipment manufacturers (OEMs) and their Tier 1 suppliers. This report provides insights into the company’s financial and operational status as of September 30, 2023.
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Key Highlights of the Tata Technologies IPO:
Here are crucial details about the Tata Technologies IPO:
- IPO Date: November 22, 2023, to November 24, 2023
- Price Band: Rs 475 to Rs 500 per share
- Face Value: Rs 2 per share
- Lot Size: 30 Shares
- Total Issue Size: 60,850,278 shares (amounting up to Rs 3,042.51 Cr)
- Offer for Sale: 60,850,278 shares of Rs 2 (totaling up to Rs 3,042.51 Cr)
Details of the Tata Technologies IPO:
- Tata Tech IPO Subscription Date: Opens on November 22, 2023, and closes on November 24, 2023.
- Listing Date: Scheduled for December 5, 2023, for the commencement of Tata Technologies’ shares trading, per the IPO schedule.
- Offer Details: The IPO aims to raise around Rs 3,042.51 crores at the upper price band. It consists of an offer-for-sale by investors and promoters.
- Tata Motors plans to offload 4.62 crore equity shares worth Rs 2,314 crore in the offer-for-sale.
- Investors Alpha TC Holdings Pte Ltd and Tata Capital Growth Fund I are selling shares worth Rs 486 crore and Rs 243 crore, respectively.
- Tata Technologies has set aside shares for its employees and Tata Motors’ shareholders.
Company Financials:
- Tata Technologies reported a 42.8% year-on-year growth in consolidated net profit, reaching Rs 624 crores for the fiscal year ending March 2023. Revenue surged by 25.81% during this period.
Tata Technologies has fixed the price band for the IPO at Rs 475-500 per share, leading to a valuation of Rs 20,283 crore at the upper price band.
Lot Size:
- Investors can bid for lots of 30 equity shares in multiples of 30 thereafter. For retail investors, the minimum investment is Rs 14,250 (30 shares at the lower price band of Rs 475). This amount increases to Rs 15,000 at the upper end.
Currently, Tata Technologies’ shares are highly sought after in the unlisted market, commanding an approximately 80% premium over the IPO price, trading at Rs 380 higher than the issue price of Rs 500.
Analysts foresee the potential for the company to double investors’ wealth on the day of listing if the trends persist.
The IPO garnered robust demand, witnessing over six times the subscription on the first day alone. Being the first IPO from the Tata Group since TCS, this has significantly contributed to the buzz surrounding the issue.
Objectives of Tata Technologies IPO:
(i) Realizing the benefits of listing equity shares on stock exchanges.
(ii) Executing the selling shareholders’ offer to sell up to 60,850,278 equity shares. Additionally, the company anticipates that the proposed listing will enhance brand recognition and exposure while establishing a public market in India for equity shares.
Utilization of Proceeds:
Proceeds from the Selling Shareholders’ Offer for Sale will not accrue to the company. After covering their share of offer-related costs and taxes, each Selling Shareholder will get their share of the proceeds from the Offer for Sale.
Tata Motors’ decision to consider several vital factors drove Tata Tech IPO:
- Revenue Diversification: Tata Technologies increased its earnings from non-captive accounts, reducing reliance on Tata Motors and Jaguar Land Rover for revenue.
- Chip Shortage Impact: Tata Motors faced challenges producing Jaguar Land Rover vehicles due to a semiconductor shortage.
- Financial Concerns: Tata Motors sustained a net loss of Rs. 945 Crore in Q2 and saw a rise in automotive debt.
- Debt Reduction Strategy: Tata Motors aims to minimize its automotive debt by 2024 and plans to use proceeds from the Tata Technologies IPO to ease losses and reduce debt.
- Previous Attempt: Tata Motors previously called off a deal to sell its stake in Tata Technologies due to regulatory approval delays.
- Strategic Shift: Tata Motors aims to diversify beyond the auto industry, focusing on non-automotive sectors to ensure consistent revenue amidst global uncertainties.
The success of the Tata Technologies IPO is still being determined due to market volatility and regulatory factors. However, the company has shown resilience amid challenges, achieving strong financial results, including revenue growth, improved operating profits, and notable awards for innovative solutions, contributing to the Tata Group’s brand value.
FAQ
When will Tata Tech IPO launch?
The Tata Technologies IPO is scheduled to run from November 22 to November 24, 2023.
Are Tata Tech shares listed on the stock exchange?
Currently, Tata Technologies shares are not listed on any stock exchange. However, after the IPO, the company will list its shares by December 5, 2023.
