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Tata Technologies IPO

21 Nov 2023

Introduction

The Indian stock market investors have been quite occupied for the last few days. While a slew of Initial Public Offerings (IPOs) has been launched into the market, Nifty and Sensex are soaring at record highs. Amid all these, the Securities and Exchange Board of India (SEBI) has given a green signal to Tata Technologies IPO, which would be the first Tata Group IPO in almost two decades.

As you eagerly wait for this IPO to open for public investors, several Tata Group shares have already gained momentum. But before you invest your hard-earned money in this IPO, below are a few details you must know.

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IPO Date 22 Nov to 24 Nov 2023
Listing Date 5th Dec 2023 
Face Value 2 ₹ Per Share
Price Band ₹ 475 to ₹ 500
Lot Size 30 Shares
Total Issue Size ₹ 3042.51 Cr
Issue Type Book Built Issue IPO
Listing At NSE, BSE

About Tata Technologies IPO:

Tata Technologies offers engineering services and Information Technology (IT) solutions to clients across the globe. The company boasts deep expertise and domain knowledge in the automotive industry and adjacent sectors such as aviation, transportation, and heavy machinery construction. The company is a subsidiary of Tata Motors and belongs to the prestigious Tata Group. 

Tata Technologies would be the first Tata Group IPO in 19 years, the last being Tata Consultancy Services IPO in 2004. The company was originally incorporated as “Core Software Systems” in 1994 but was later acquired by the Tata Group and renamed “Tata Technologies” in 2001.

Strengths of Tata Technologies:

The strengths of the company include:

  • Possesses deep expertise in the automotive industry. It helps its global clients with product development and OEM supplies
  • Provides end-to-end solutions for the manufacturers of electric vehicles (EVs), which are the new-age mobility trend
  • The client portfolio includes some of the biggest EV and OEM manufacturing companies in the world
  • Has an efficient global delivery model with adequate client engagement and scalability
  • Tata Group is a well-recognized global brand with years of trust and legacy

Weaknesses Tata Technologies:

Some risk factors or weaknesses associated with Tata Technologies include:

  • Draws maximum revenues from its top five clients. If the relationship with them deteriorates, the revenues might get hit
  • Highly dependent on the automotive sector. If this industry goes through a slowdown, its business can witness an adverse impact
  • The company’s success is largely due to its engineers and management team. Attrition may lead to a loss of clients
  • Prone to system failures, phishing attacks, data security breaches, etc. Such events can damage the company’s reputation
  • Dependence on vendors and software partners may come to haunt the company when there is a limited supply

Financials of Tata Technologies:

The company’s ability to tap into the emerging EV market has worked in its favour. The revenues have grown strongly from Rs. 2,381 crores to Rs. 3,530 crores in one year between FY 2021 and FY 2022. The company’s net profit also increased tremendously from Rs. 239 crores to Rs. 437 crores in the same period.

While the liabilities of the company have grown from Rs. 453 crores in FY 2020 to Rs. 1,696 crores in FY 2022, the value of the total assets has also soared. Have a look at the table below to understand Tata Technologies’ financials:

Particulars As of and For FY Ending March 31
2020 2021 2022
Revenue from Operations 2,852 2,381 3,530
Net Profit 252 239 437
EBITDA 515 431 694
Equity Per Share 6.2 5.89 10.77
Current Assets 1,349 2,388 2,980
Current Liabilities 453 1,182 1,696

*Amount in Crores

Details of Tata Technologies IPO

The Tata Group filed the preliminary papers for Tata Technologies IPO in March 2023 and got the nod in July. The issue will be a complete offer for sale (OFS) with shareholdings offloading up to 9.57 crore units that represent 23.60% of the company’s paid-up share capital. Although the issue size of the IPO is yet to be disclosed, it is estimated to be worth at least Rs. 4,000 crores.

About 50% of the offer will be reserved for Qualified Institutional Buyers (QIBs), 35% for retail investors, and the remaining 15% for non-institutional investors. Other details, such as IPO opening and closing dates, lot size, allotment finalization, and listing date are not yet declared by the company. However, the IPO is expected to hit the stock markets in mid-July 2023.

What to do before investing in Tata Technologies IPO?

The current market conditions and the rich history of the Tata Group root strongly for the subscription of Tata Technologies IPO. Its ability to cater to its global clients and tap into the emerging EV market means that the company is poised for growth in the future. No wonder this is one of the most awaited IPOs of 2023.

But before investing your hard-earned money in an IPO, you must take cognizance of the company’s business verticals, financials, promoters, and other details. If you need a Demat account to invest in IPOs, you can open it for free with Motilal Oswal.

 

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