Tata Technologies IPO would open for subscription on 22nd November and closes on 24th November, 2023. Tata Tech IPO news has been buzzing for some time now. The IPO Price band is finally fixed at Rs 475 to Rs 500 per share. Tata Technologies is a leading global engineering services company. The company has demonstrated strong revenue and margin growth in the last few years. Should you invest in Tata Technologies IPO? This article would provide more insights about company business, IPO details, Positive Aspects, Risk Factors and do complete review.
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About Tata Technologies Limited
Company is a leading global engineering services company. Its offers product development and digital solutions, including turnkey solutions, to global original equipment manufacturers and their tier 1 suppliers.
Company endeavor is to create value for its clients by helping them develop products that are safer, cleaner and improve the quality of life for their end-customers. They have deep domain expertise in the automotive industry and leverage this expertise to serve its clients in adjacent industries, such as in aerospace and transportation and construction heavy machinery.
Company primarily categorize its lines of business as follows:
#1 – Services:
Its primary business line is services, which includes providing outsourced engineering services and digital transformation services to global manufacturing clients helping them conceive, design, develop and deliver better products. Its Services business contributed Rs 35,311.55 million and Rs 19,863.90 million to its revenue from operations in Fiscal 2023 and the six-months ended Sep, 2023, respectively, comprising 80.00% and 78.62% of its revenue from operations for the respective periods.
#2 – Technology Solutions:
They complement its service offerings with its Products and Education businesses.
Through its Products business they resell third-party software applications, primarily product lifecycle management software and solutions and provide value-added services such as consulting, implementation, systems integration and support.
Its 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 center offerings through its proprietary iGetIT platform.
In Fiscal 2023 and the six-months period ended September 30, 2023, its Technology Solutions business contributed ₹ 8,830.22 million and ₹ 5,403.12 million to its revenue from operations, respectively, comprising 20.00% and 21.38% of its revenue from operations for the respective periods.
Tata Technologies IPO Date, Price Band and Size
| IPO Opening Date | 22-Nov-23 |
| IPO Closing Date | 24-Nov-23 |
| IPO Listing Date | 05-Dec-23 |
| Issue Type | Book Built Issue IPO |
| Face Value | Rs 2 per equity share |
| IPO Price band | Rs 475 to Rs 500 per equity share |
| Lot Size | 30 Shares |
| Listing at | BSE and NSE |
| Total Issue Size | Rs. 3042.51 Crores |
Objectives of Tata Technologies IPO
The IPO size is Rs 3,042.51 Crores and is entirely OFS. Under Offer For Sale, the proceeds would go to selling share holders and company would not get anything.
Tata Technologies Limited Financials
| Financial Year ending / Period ending (Amt in Crores) | ||||
| Period Ended | 31-Mar-21 | 31-Mar-22 | 31-Mar-23 | 30-Sep-23 |
|---|---|---|---|---|
| Assets | 3,572.74 | 4,218.00 | 5,201.49 | 5,142.42 |
| Revenue | 2,425.74 | 3,578.38 | 4,501.93 | 2,587.42 |
| Profit After Tax | 239.17 | 436.99 | 624.04 | 351.90 |
| Net Worth | 2,142.15 | 2,280.16 | 2,989.47 | 2,853.13 |
| Reserves and Surplus | 1,897.46 | 2,028.93 | 2,605.60 | 2,455.29 |
Tata Technologies IPO – Key Dates
| IPO Opens on | 22-Nov-23 |
| IPO Closes on | 24-Nov-23 |
| Basis of Allotment | 30-Nov-23 |
| Initiation of Refunds | 01-Dec-23 |
| Credit of Shares to Demat | 04-Dec-23 |
| Listing Date | 05-Dec-23 |
| Cut-off time for UPI mandate confirmation | 24-Nov-23 – 5 pm |
How is Tata Technologies IPO Valuation?
- Its IPO price band is Rs 475 to 500 per share
- If we consider last year FY23 EPS of Rs 15.37, P/E ratio works out to be 33x
- If we consider last 3 years weighted EPS of Rs 12.26, P/E ratio works out to be 41x
- The listed peers like KPIT Technologies trading at P/E 80.3x (Highest) and L&T Technology is trading at P/E of 37.5x (Lowest) and industry average P/E is 59.7x. Hence, the IPO price band at P/E of 33x to 41x is reasonably priced.
Tata Technologies IPO GMP today
Tata Tech IPO GMP is 298+ as per the report on livemint.
GMP, aka Grey Market Premium, is the premium at which the investors are buying the shares in offline market beyond the IPO price.
Why should you invest in Tata Technologies IPO?
- Tata Technologies is a subsidiary of Tata Motors, which is part of Tata group, a trusted brand.
- Company is a leading global engineering services company with deep expertise in the automation industry. Its comprehensive portfolio of services for the automotive industry addresses the product development and enterprise optimization needs of traditional OEM’s and new energy vehicle companies, together with their associated supply chains.
- Company has differentiated capabilities in new age automation trend EV’s.
- Company had strong revenue and margin growth in the last 3 years.
Risk Factors of investing in Tata Technologies IPO
While there are several positive factors to buy this IPO, investors should also consider negative or risk factors indicated below.
- The objectives of the IPO is only OFS. Under Offer for Sale, the proceeds would go to selling share holders and company would not get anything.
- Company derives significant revenues from its top 5 clients (73% of it revenues for FY23) including Tata Motors. Any loss of such clients can have significant impact on company revenues.
- Company revenues are dependent on clients concentrated in the automotive segment. Any down trend in this sector can have impact on the company business.
- It expects significant future revenues from new energy vehicle companies, many of which can be start-up companies. Uncertainties about the whole strategy may have an adverse impact on the company’s business.
- Company invests in unsecured debt instruments which may carry lower interest rates. As an example, its inter corporate deposits amount to Rs 116 Crores deposited at 5% to 5.75% interest rates.
- Company has negative cash flows in the past and may continue to have in the future which can affect liquidity and operations.
- Investors should refer Tata Technologies IPO RHP for both internal and external risk factors.
Also Read: 10 Largecap Mutual Funds with highest returns in last 5 years
Should you invest in Tata Technologies IPO?
You might be wondering whether this IPO is good or bad for investment.
- Tata Technologies is the subsidiary of Tata Motors. Company is a leading global engineering services company with deep expertise in the automation industry. Company had strong revenue and margin growth in the past.
- On the flip side, IPO contains only OFS where the money would go selling share holders and company would not get anything. It derives 40% of its revenues from Tata Motors and Jaguar Land Rover and over 70% of its revenues come from top-5 clients which poses risk. It expects future revenue to come through new energy vehicle companies, many of them could be start-up companies. Uncertainty about such strategy poses risk too.
Investors who understand all these risk factors may consider investing in this IPO.
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Any reservation for Tata motors employees ?
No reservation for Tata motors employees.
However 60,85,027 shares or 10% of the offer has been reserved for the shareholders of Tata Motors
amazing insights covering all pointers
Thank you Nithin
Is there any Tata Motor’s shareholders reserve quota in this issue.
Kindly elaborate.
Tata Technologies has reserved 60,85,027 shares / 10% of the offer has been reserved for the shareholders of Tata Motors
Very deep good information
Thank you Shantilal. Pls share this with your friends who might be looking for similar analysis before investing in such IPOs
Thanks for the details..
Thanks Anil