Investors are keenly eyeing Tata Group’s first initial public offer (IPO) in nearly two decades. The IPO of Tata Technologies will be the first Tata IPO in 19 years after Tata Consultancy Services (TCS), which got listed on the bourses in 2004. Last month, Tata Technologies IPO got the go-ahead from capital markets regulator SEBI
Tata Technologies 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
A pure-play engineering services company with a revenue scale of $500 million, Tata Technologies is engaged in manufacturing-led verticals such as automotive, aerospace, and transportation & construction Heavy Machinery (TCHM). It was acquired by Tata Group in 2001. KPIT Technologies, Tata Elxsi, L&T Technology Services, and Cyient are some of the peers of Tata Technologies
Tata Motors holds a 74.69% stake in Tata Technologies. Under the OFS, Tata Technologies' parent company Tata Motors will offload 8.11 crore shares or a 20% stake in the company through the IPO. JM Financial Limited, Citigroup Global Markets India Private Limited, and BofA Securities India Limited are the book-running lead managers to the issue
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. Some even mentioned that Tata Technologies were trading around Rs 850 levels and since there is no official announcement yet, there have been supply-side constraints
Even before any official announcement regarding the IPO date, price band, lot size etc, Tata Technologies shares are in a buzz in the grey market. According to grey market watchers, Tata Technologies IPO shares are commanding a grey market premium or GMP of Rs 100 apiece. According to people dealing in unlisted securities, there have been instances of bulk buying around Rs 750 levels
While 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
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