With new issues opening for subscription every week on Dalal Street, investors are eagerly anticipating the upcoming initial public offering (IPO) of Tata Technologies. This will be the first IPO from the Tata Group in 19 years after Tata Consultancy Services (TCS), which got listed on the bourses in 2004
Tata Technologies IPO got the go-ahead from capital markets regulator SEBI last month. The Tata Group company had filed public offer papers with SEBI in March this year, according to which, its IPO is purely an offer for sale (OFS). Its shareholders will reportedly offload up to 9.57 crore units representing 23.60% of its paid-up share capital. Upon listing, Tata Technologies will join the other 28 listed Tata Group companies
Tata Technologies IPO OFS will involve Tata Motors selling a 20% stake in Tata Technologies, equivalent to 8.11 crore shares. Additionally, Alpha TC Holdings Pte and Tata Capital Growth Fund I will offload portions of their holdings, with Alpha TC Holdings Pte selling up to 97.16 lakh shares (2.40%) and Tata Capital Growth Fund I offering up to 48.58 lakh equity shares (1.20%)
Currently, Tata Motors holds a 74.69% stake in Tata Technologies, while Alpha TC Holdings Pte and Tata Capital Growth Fund I hold 7.26% and 3.63% respectively. JM Financial Ltd, Citigroup Global Markets India, and BofA Securities India have been appointed as book-running lead managers to the IPO, further enhancing investor confidence
As per grey market watchers who wish to remain anonymous, there is a buzz that Tata Technologies' price band may either be Rs 450-500 or Rs 700-800 range. The grey market premium (GMP) price for Tata Technologies IPO is currently estimated between Rs 85 and Rs 100 per share. According to people dealing in unlisted securities, there have been instances of bulk buying around Rs 750 - 850 levels
The size of Tata Technologies IPO hasn’t been disclosed yet. A media report cited Krishna Raghavan, Founder, UnlistedKart, a SEBI-registered research analyst firm, saying that Tata Technologies' recent buyback valued the Tata Group company at Rs 16,080 crore, indicating that the offer size could be at least Rs 3,800 – Rs 4,000 crore
In FY22, Tata Technologies reported a net profit of Rs 436.99 crore, and a total revenue of Rs 3,578.38. Its net profit for the April-December period of FY23 was Rs 407.47 crore and revenue during the period stood at Rs 3,052.30 crore. On a 9MFY23 basis, the company has reported overall relatively low revenue growth, low margin expansion, and higher attrition, B&K Securities said in a note
Revenue growth for Tata Technologies has been decent in the last three years, as the company grew at a CAGR of 8.6% (FY20-22). KPIT Tech, LTTS and Tata Elxsi grew at a compounded annual growth rate of 4%, 5.8%, and 21.2%, respectively, in the same period, said B&K Securities, adding that the company reported an EBIT margin of 15.9% in FY22 and 16.9% in M9FY23, which has expanded by 3% from 13% in FY20
Tata Technologies IPO is expected to generate significant interest due to the strong reputation of the Tata Group and Tata Technologies' expertise in the engineering services domain. The company's solid track record, along with its association with the renowned Tata Group, is expected to attract considerable attention from investors seeking exposure to the engineering services sector in India
Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today. Investors should consult their financial advisors before taking any position