Tata Technologies, a unit of Tata Motors Ltd, has filed a draft prospectus with the Securities and Exchange Board of India (SEBI) to raise funds through an initial public offering (IPO). The IPO is an offer for sale (OFS) by promoters and selling shareholders. The shares of the company are proposed to be listed on both the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).
Company Overview and Financial Performance
Tata Technologies is a global product engineering and digital services company that offers turnkey solutions to global original equipment manufacturers (OEMs). The company has a workforce of over 11,000 employees spread across 18 global delivery centers. For the nine-month period ended December 2022, the company clocked a 15% year-on-year growth in revenue at Rs 3,052 crore. The services segment revenue contributed 88% of the total revenue. The company’s net profit during the same period stood at Rs 407 crore.
Issue Details
The IPO issue is a complete OFS, under which shareholders will offload up to 9.57 crore equity shares, representing 23.60% of its paid-up share capital. Tata Technologies has a paid-up share capital of Rs 811.83 crore and an authorized share capital of Rs 350 crore. The size of the IPO hasn’t been disclosed, but according to a SEBI-registered research analyst firm, Tata Technologies’ recent buyback valued the company at Rs 16,080 crore, indicating that the offered size could be at least Rs 3,800 – Rs 4,000 crore.
Selling Shareholders
Under the OFS, Tata Motors, the parent company of Tata Technologies, will offload 8.11 crore shares or a 20% stake in the company. Among other shareholders, Alpha TC Holdings Pte plans to sell up to 97.16 lakh shares (2.40%), and Tata Capital Growth Fund I would offload up to 48.58 lakh equity shares (1.20%). Tata Motors currently holds a 74.69% stake in the company, while Alpha TC Holdings Pte and Tata Capital Growth Fund I have a 7.26% and 3.63% stake, respectively.
Objects of the Offer
According to the draft red herring prospectus (DRHP), the company will not receive any proceeds of the OFS from the selling shareholders. Each of them will be entitled to the respective proportion of the proceeds of the IPO after deducting their portion of the offer-related expenses and the relevant taxes thereon.
Offer Details
About 50% of the offer is reserved for qualified institutional buyers (QIBs), 35% of the issue is reserved for retail investors, and 15% is for non-institutional investors.
Expert View
Krishna Raghavan, Founder of UnlistedKart, a SEBI-registered research analyst firm, said, “Tata Technologies has been at the forefront of driving innovation and providing quality services to its clients, with a significant contribution from its service segment. With a successful IPO, the company will be able to generate more value for its shareholders and continue its growth trajectory. With the backing of its existing promoters and shareholders, Tata Technologies is poised for a bright future.”
Book Running Lead Managers
JM Financial Ltd, Citigroup Global Markets India, and BofA Securities India are the book running lead managers to the issue.