Ipo |
July 18, 2023Tata Technologies Upcoming IPO 2023 – Everything you should know before applying
Introduction
Tata Group is coming up with the IPO of Tata Technologies and it is after almost two decades that this conglomerate is offering an IPO. Thus, the market is going gaga for obvious reasons. On the other hand, experts anticipate this Upcoming IPO of Tata to be one of the biggest IPOs in recent times. So, what is so special about Tata Technologies IPO that you must know before you apply for it? Let’s find out.
Tata Technologies is a leading business in global engineering services, which offers digital solutions and product development to original equipment manufacturers and their top-tier suppliers worldwide. It primarily offers its services and products to the automotive industry, and in adjacent industries like transportation and construction heavy machinery (TCHM) and aerospace industries as well.
Tata Technologies with its two-decades-long experience and expertise in this domain has been growing in the Global engineering, research and development industry (ER&D), which is expected to be $2.28 -$2.33 trillion (as per spending) by the year 2025. This industry is expected to be growing at a CAGR of 10-12% between 2021 and 2025 and the factors driving this double-digit growth are increasing regulatory interventions for making safer, better and cleaner products, narrowing the product innovation cycle, more outsourcing, and demand for advanced technologies in the product space.
IPO Details
Tata Technologies Upcoming IPO is an ‘offer to sale’ by the selling shareholders. The company will not receive any proceeds or benefits of the IPO and the entire proceeds after deduction of the offer expenses will be distributed amongst the shareholders as per their shareholding ratio.
| IPO Date |
to be announced |
| Listing Date |
to be announced |
| Face Value |
?2 |
| Price |
[.] to [.] per share |
| Lot Size |
to be announced |
| Total Issue Size |
95,708,984 shares (aggregating up to ? [.] Cr) |
| Offer for Sale |
95,708,984 shares of ?.2 (Aggregating up to ? [.] Cr) |
| % of pre-offer paid-up equity share capital |
87.58% |
| % Post-offer paid-up equity share capital |
[.]% |
| Issue Type |
Book Building IPO |
| Listing At |
BSE, NSE |
| QIB shares offered |
Not more than 50% of the net issue |
| NII (HNI) shares offered |
Not less than 15% of the net issue |
| Retail Shares Offered |
Not less than 35% of the Net issue |
Objects of Offer
- To list the equity shares on NSE and BSE
- Offer for sale of 95708984 equity shares by the selling shareholders
Selling shareholders
- Tata Motors Limited: It is the promoter-selling shareholder with 81133706 equity shares.
- Alpha TC Holdings Pte. Ltd. – It has 9716853 equity shares
- Tata Capital Growth Fund I – It has 4858425 equity shares
Company Background
For every investor, who is looking to invest in the Upcoming IPO of Tata Technologies, besides evaluating the market, industry, and financials of the company, it is important to understand the business itself. Here are the important factors you need to know about Tata Technologies –
- Tata Technologies is one of the leading Engineering R&D, digital services and Software businesses with more than 11 thousand innovators across the globe.
- It is present across three continents – Asia Pacific, North America and Europe with more than 19 global delivery centres across 27 countries in these regions.
- The core services of Tata Technologies include the following –
- Engineering, Research and Development (ER&D) – This segment of the business helps the clients of the firm in conceptualising, designing and developing enhanced products and services for a better and sustainable future.
- Digital Enterprise Services (DES) – This segment of the business helps the clients to implement tools, technologies, and solutions for improving the businesses of the manufacturers.
- Education Offering: Tata Technologies also work for a better tomorrow by collaborating with universities across the globe to build next-generation engineers. It helps them to learn practical skills, which are in demand in the market and a lot more.
- Products and Value Added Reselling (VAR) – Tata Technologies also help its clients to identify markets, and deploy the right product development software at the right market, which enhances and generates more business for the manufacturers and services.
Certifications and Awards
Tata Technologies has the following certifications which establishes the expertise and quality of its products and services –
- ISO 9001:2015
- AS 9100D
- ISO 27001:2013
- ISA 45001:2018
Awards
- Tata Technologies was recognised as ‘A Global Leader in ER&D Services’ by Zinnov Zones in 2022. This is the sixth time in a row that it gets this award, which truly establishes its dominance in the ER&D industry.
- It has been also awarded with Frost & Sullivan Company of the Year 2020 award.
Major milestones
- Tata Technologies acquired Escenda Holding AB in 2017
- Acquisition of Cambric Holdings Inc. in 2013
- Tata Technologies launched electric mobility vehicle (eMO) in 2012
- It acquired INCAT International UK in 2005 where it bought the entire equity of the firm.
Leadership
The board of directors of Tata Technologies has –
- Warren Harris – CEO & MD
- Ajoyendra Mukherjee – Chairman, Independent Director
- Usha Sangwan – Independent, Non-Executive Director
- Nagraj Ijari - Independent, Non-Executive Director
- Aarthi Sivanandh - Independent, Non-Executive Director
- PB Balaji - Non-Executive Director
- Shailesh Chandra - Non-Executive Director
Market Analysis
- By 2025, the overall ER&D market is expected to grow at a CAGR of 10-12%.
- By 2027, the ER&D outsourcing market is expected to grow at a CAGR of 24.3% and the market size to be around $1037.5 billion.
- Digital engineering spending is anticipated to grow at a CAGR of around 18% till 2025
- Automotive ER&D spend market size to be around $207 billion by 2025
- The shift towards electrical vehicles is another major factor driving the growth in this industry. Globally, the automotive industry is expected to spend around $515 billion in developing and building EVs.
- TCHM ER&D segment spend is anticipated to increase to around $45 billion by 2025.
Investment Potential:
The investment potential of Tata Technologies seems bright not only because it is a Tata Group IPO that too after such a long gap and one of the most anticipated IPOs, but also 0
- It is a mid-cap company at present, and mid-caps are on the rise.
- Exceptional growth prospect of the industry itself
- The clientele of Tata Technologies is a concrete one with over 35 traditional OEMs along with tier-I suppliers. There are also more than ten new energy vehicle companies associated with them.
Apart from the strong fundamentals of the company, they have solid financials too.
| Particulars |
Dec’22(in ? million) |
Dec’2021(in ? million) |
March’22 (in ? million) |
March’2021 (in ? million) |
March’20 (in ? million) |
| Revenue |
30522.95 |
26476.88 |
35783.82 |
24257.38 |
28969.60 |
| Profit Before Tax (PBT) |
5358.04 |
4463.83 |
5868.56 |
3152.65 |
3919.91 |
| Total Comprehensive Income |
4719.92 |
3354.68 |
4340.36 |
2893.11 |
3124.95 |
| EPS (Basic) |
10.04 |
8.17 |
10.77 |
5.89 |
6.20 |
- As you can see in the above table, the revenue has increased in the current year compared to the previous year, as well as in quarters.
- Similarly, PBT and Total comprehensive income have surged
- EPS almost doubled itself between March’21 and March’22, which indicates the exceptional potential for a rise in the value of investments of the shareholders.
Expert’s Views
- Avinash Gorakshkar Head of Research at Profitmart Securities commented that he expects Tata Technologies Upcoming IPO to be a success. He also said that the IPO price would be at least four to five times the price at which the main shareholder that is Tata Motors had acquired the shares.
- Anuj Gupta, Vice president – Research of IIFL Securities said that he anticipates the market capitalization of Tata Technologies to be around Rs. 18000 crores to Rs. 20000 crores and the price of each share would be between Rs. 450 and Rs.500.
Risk Factors
While Tata Technologies has all the eyes on it due to its brand value, strong fundamentals, financials, and other factors, there are certain risks associated with the business as well, which you need to evaluate as well.
- Tata Technologies procure materials from its top five clients, which are Tata Motors, and other subsidiaries. So, if these businesses suffer losses, then Tata Technologies can be affected as well.
- The revenue of Tata Technologies comes mainly from the automotive segment of the business. Thus, a slowdown in the economy, which can hurt the automotive segment massively, can hurt Tata Technologies’ revenue as well.
Conclusion
Tata Technologies is preparing for the next-gen technologies, for building a sustainable future for all. Its brand value, efficient and prudent management, and exceptional fundamentals are all favouring its Upcoming IPO in 2023. However, as an investor, you need to evaluate both potential as well as the risk factors associated with the business, and the industry to have a wise investment decision.
If you are currently seeking information on upcoming IPOs in 2023, please do not hesitate to reach out to Findoc. We are here to provide you with the latest details and assist you in any way possible.