SEBI has approved the initial public offer (IPO) of Tata Technologies Limited, marking the return of the Tata Group to the IPO market after a gap of 20 years. Tata Technologies, established in 1994, specializes in engineering services and offers a range of services to domestic and international organizations, including product development, digital solutions, and turnkey OEM solutions.
There isn’t much information available about Tata Technologies Limited’s public offer as the company has only recently submitted its draft red herring prospectus with the SEBI. On the other hand, it is evident from the DRHP that the entire IPO is a offer for sale from the company’s promoters. This clearly indicates that the money raised through this public offer will go to the selling promoters and not to the company.
Through this IPO, Tata Motors Limited, the parent company of Tata Technologies, is planning to divest around 8,11,33,706 equity shares, which represents 20% of its stake in the company. Additionally, two other promoters Alpha TC Holdings Pte. Ltd. and Tata Capital Growth Fund I are also planning to offload 97,16,853 and 48,58,425 equity shares respectively.
The financial results of Tata Technologies up to the quarter that concluded on December 31, 2022, are included in the draft red herring prospectus.
The DRHP states that Qualified Institutional Buyers (QIBs) will get all of the approximately 50% of the total issue that has been reserved for them. 15% of the remaining 50% has been set aside for non-institutional investors (NIIs), and 35% has been set aside for regular investors.
Tata Technologies: Financials
- The company reported a revenue of Rs 2,852.06 crore, Rs 2,380.91 crore, Rs 3,529.58 crore, and Rs 3,011.79 crore for FY20, FY21, FY22, and 9MFY23, respectively.
- Tata Technologies reported a net income of Rs 251.57 crore, Rs 239.17 crore, Rs 436.99 crore, and Rs 407.47 crore for FY20, FY21, FY22, and 9MFY23, respectively.
- The company’s net profit margins have improved from 8.82% in FY20 to 12.38% in FY22. In 9MFY23, the margins have further increased to 13.53%.
After TCS’s initial public offer in 2004, Tata Technologies is the first company in the Tata Group to list on stock exchanges. Once the IPO launches, we may anticipate a positive reaction given the Tata brand and Tata Tech’s solid financial position. It is an significant advancement for Tata Motors in terms of both releasing wealth and reducing debt.
