Block deal today: Tata Technologies shares in focus as TPG looks to sell 2.1% stake

US-based private equity firm TPG is set to offload 85,16,499 shares, equivalent to a 2.1 per cent stake, in Tata Technologies Ltd through block deals today. The offer price range for this transaction has been set between Rs 744.50 and Rs 767.50 per share, with the total block size estimated at Rs 634.10 crore (or $74 million at the exchange rate of 85.59 per dollar). This price range marks up to a 3 per cent discount compared to Tata Technologies' closing stock price of Rs 768 on Tuesday.

Investment bank BofA Securities is handling the proposed clean-out trade, which has now been launched, according to sources.

TPG held a 6.01 per cent stake in Tata Technologies at the end of March quarter, translating to 2,43,80,305 equity shares through TPG Rise Climate SF Pte. Ltd. The planned sale represents a strategic move for TPG as it reduces its holdings in the company. Tata Technologies' shares have seen an 18.64 per cent rise over the past month but remain down 25 per cent over the past year. In contrast, the BSE IT index has recorded a 3.49 per cent increase over the past month and a 9.39 per cent rise over the past year.

Tata Technologies recently reported a 20 per cent year-on-year increase in consolidated profit after tax, reaching Rs 189 crore. However, its revenue for Q4FY25 declined by 1.2 per cent, registering Rs 1,286 crore compared to Rs 1,301 crore in the corresponding quarter of the previous year. This financial performance underscores a challenging period for the company, partially mitigated by progress in its joint venture with BMW.

The BMW joint venture is rapidly expanding, with the headcount expected to reach four digits, starting from around 100 professionals in November 2024. This joint venture signifies BMW's strategic long-term commitment, offering an optimistic outlook despite current market challenges.

ICICI Securities has maintained a 'SELL' rating for Tata Technologies, with a target price of Rs 510. The firm on April 28 noted, "For FY25, it reported a revenue decline of 1.2 per cent USD, with underperformance prevailing since the VinFast ramp-down. Though aerospace, battery engineering and BMW JV segments are panning out well, we expect a slow recovery from challenges in automotive segment and project-based nature of TATATECH’s technology solutions segment."

The market will closely observe the impact of TPG's share sale on Tata Technologies' stock performance. While the company has shown resilience in its joint ventures, challenges in the automotive sector and project-based segments continue to pose significant hurdles.

Investors and analysts will be keen to see how Tata Technologies navigates these challenges in the coming months, particularly in light of strategic partnerships like the one with BMW. The outcome of these developments will be crucial in determining the company's future trajectory in the competitive tech industry.