Tata Technologies Ltd, an engineering and digital services firm focused on the automotive and aerospace industries, to go public, marking the first initial public offering for a conglomerate entity in nearly two decades since the IPO of Tata Consultancy Services Ltd in 2004 is ready.
Tata Technologies, which counts Jaguar Land Rover and Tata Motors as its key customers, filed a draft prospectus with the Securities and Exchange Board of India (SEBI), calling for an IPO of up to 95.71 million shares to be sold by its current Proposed as a pure proposal for Promoters and shareholders including Tata Motors, Alpha TC Holdings Pte, and Tata Capital Growth Fund I. The fundraising proceeds will go entirely to the selling shareholders, as Tata Technologies is not offering any new shares for sale.
Tata Motors holds 74.69% stake in the company, while Alpha TC Holdings and Tata Capital Growth Fund I hold 7.26% and 3.63%, respectively.
The pricing of the IPO has not been disclosed yet, but listed peers in engineering research and design (ER&D) sectors such as KPIT Technologies, Tata Elxsi and L&T Technology Services could provide a possible benchmark.
Tata Motors, which announced its plan last December to take Tata Technologies public, will benefit from the cash flow generated by the IPO to achieve its debt reduction targets.
“The IPO proceeds will help further reduce the balance sheet of Tata Motors. Jay Kale, an analyst at Elara Capital, said although the company may still miss meeting its net-zero automotive debt target, it will help it unlock value in its subsidiaries.
The percentage dilution will depend on the value agreed between the company and its bankers.
Tata Technologies, which was primarily focused on serving as a captive outsourcing arm for Tata Motors in its early years, has since been gradually moving away from it. Over the years, the company has focused on new age electric vehicle (EV) manufacturers globally, apart from foraying into sectors such as aerospace and other transportation sub-segments.
Tata Technologies is a strategic supplier to aircraft manufacturer Airbus. It also stands to benefit from Air India’s strong ties with Airbus and Boeing over its large aircraft orders.
Industry experts said Tata Tech is well positioned to take advantage of the technological changes driving the automotive sector: autonomous, connected, electric and shared mobility.
An IT industry expert said, “As these technologies enhance the software that goes into vehicles and the possibility of delivering this software remotely, it plays to the strength of the talent pool in India, which in itself is a There is also an important market”. to be named.
Tata Technologies’ non-captive account contribution has increased from 46% in FY20 to 64% in the year ending March 31, 2022. The company registered a 16% increase in revenue 3,052 crore for the nine months ended December 31, according to Krishna Raghavan, founder of UnlistedCart, a platform for transacting shares of privately held companies, with revenue from the services segment accounting for 88% of the total revenue.
“As part of its strategy to meet the product engineering and digital requirements of the global aerospace and defense sector, Tata Technologies recently inaugurated its innovation center in Toulouse, France. With a workforce of over 11,000 employees spread across 18 global distribution centers, the company has been instrumental in driving innovation and meeting the digital and product engineering needs of various industries, Raghavan said.
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