Tata Technologies IPO opens today: 10 things to know before subscribing to Rs 3,042 cr issue

Tata Technologies plans to raise a total of Rs 3,043 crore via the initial stake sale, which will be an offer-for-sale (OFS) of 6.1 crore equity shares of face value of Rs 2 each

The much-awaited initial public offering of Tata Motors subsidiary Tata Technologies is set to open today, November 22. The company is planning to raise Rs 3,042.51 crore via public issue at the upper price band. The issue comprises only an offer-for-sale (OFS) by the promoter and investors. The firm raised Rs 791 crore from 67 investors through the anchor book on November 21.

Global investors like Goldman Sachs, Government Pension Fund Global, BNP Paribas Funds, Prudential Assurance Company and HSBC Global participated in the anchor book.

Domestic mutual funds and insurance companies, including SBI Mutual Fund, ICICI Prudential Mutual Fund, SBI Life Insurance Company, Kotak Mutual Fund, DSP Mutual Fund, HDFC Life Insurance Company, Mirae Asset Mutual Fund,  Axis Mutual Fund, JM Financial Mutual Fund, Bajaj Allianz Life Insurance Company, and Bharti Axa Life Insurance Company also invested in the Pune-based firm.

Also Read: Tata Technologies IPO: Anchor investors pick Rs 791 crore worth of shares

Here are 10 key things to know before subscribing to the offer:

1) IPO Dates

The IPO will open for subscription on November 22, 2023, and close on November 24, 2023.

2) Price Band

The price band for the issue has been fixed at Rs 475-500 per share. At the upper price band, the company’s valuation stands at Rs 20,283 crore.

3) Offer Details

Tata Tech plans to raise Rs 3,042.51 crore via public issue at the upper price band. The issue comprises only an offer-for-sale (OFS) by the promoter and investors. Promoter Tata Motors will offload 4.62 crore equity shares worth Rs 2,314 crore in the OFS. Investors Alpha TC Holdings Pte Ltd will be selling 97.17 lakh shares worth Rs 486 crore, and Tata Capital Growth Fund I will 49 lakh shares worth Rs 243 crore. The company has reserved 20.28 lakh shares for its employees and 60.85 lakh shares for the shareholders of Tata Motors. The IPO excluding shares reserved for employees and Tata Motors shareholders is the net issue.

Also Read: Countdown begins for Tata Technologies IPO: Should you subscribe to Rs 3,042-crore issue?

4) Objectives of Issue

Since the offer is entirely an OFS, Tata Technologies will not receive any money from this issue. Instead, all the proceeds will go to the selling shareholders.

5) Lot Size

Investors can bid for a minimum of 30 equity shares and multiples of 300 after that. Hence the minimum investment by retail investors would be Rs 14,250 (30 (Lot size) x 475 (lower price band)). At the upper end, the bidding amount will increase to Rs 15,000.

6) Company Profile

Tata Motors’ subsidiary Tata Technologies is a global engineering services company offering product development and digital solutions, including turnkey solutions, to global original equipment manufacturers (OEM) and their tier 1 suppliers. Tata Tech is a pure-play manufacturing-focused engineering, research and development (ER&D) company, primarily focused on the automotive industry. The company’s education business provides ‘phygital’ education solutions in manufacturing skills including upskilling and reskilling in relation to the latest engineering and manufacturing technologies to public sector institutions and private institutions and enterprises through curriculum development and competency centre offerings through iGetIT platform.

7) Financials

The company reported 42.8 percent on-year growth in consolidated net profit at Rs 624 crore for the year ended March 2023 and a 25 percent rise in revenue from operations at Rs 4,414.2 crore during the same period. In the six-month period ended September FY24, profit surged 36 percent to Rs 351.9 crore and revenue increased by 34 percent to Rs 2,526.7 crore compared to year-ago period.

8) Lead Managers

The book-running lead managers to the issue are Jm Financial, Citigroup Global Markets India and Bofa Securities India while Link Intime India is the registrar.

Also Read: Tata Technologies IPO anchor round: Mutual funds that invested and those skipped

9) Risks

(i) Tata Tech's top two captive customers, TML and JLR, account for roughly 40% of its TOI, posing a significant revenue concentration risk for the company.

(ii) Revenues are highly dependent on clients concentrated in the automotive segment.

(iii) The company expect a significant amount of future revenue to come from new energy vehicle companies, many of whom may be startup companies. Uncertainties about their funding plans, future product roadmaps, ability to manage growth, creditworthiness and ownership changes may adversely affect the business.

(iv) The company had negative cash flows in the past and may continue to have negative cash flows in the future, which could adversely affect the liquidity and operations.

10) Listing Date

The trading of Tata Technologies’ shares on the bourses will commence with effect from December 5, as per the IPO schedule.