Tata Technologies, a unit of Indian automobile major Tata Motors filed its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI)for an initial public offering (IPO) on Thursday. Following the announcement, the shares of Tata Motors gained 1.29% in an otherwise weak market.
Tata Technologies provides engineering and product development digital services. It caters to the automotive, aerospace, and industrial heavy machines space among others. It helps companies in the convergence of digital technology and traditional engineering to develop better products.
The company is a strategic supplier to Airbus and had recently inaugurated its innovation centre in Toulouse, France. This was a part of its strategy to cater
Tata Motors gave the in-principle approval for partial divestment of its investment in Tata Technologies via the IPO route. to the product engineering and digital requirements of the global aerospace and defence sector. Moreover, it joined the Foxconn-initiated MIH Consortium to promote the development of sustainable mobility solutions and encourage collaboration within the industry, in June last year.
The IPO
The engineering unit said that it will not offer any of the 95.7 million shares, representing around 23.6% of its paid-up share capital, to be sold in the IPO. Instead, Tata Motors which holds a 74.69% stake in the company, will sell up to 81.1 million shares, Alpha TC Holdings will sell 9.7 million shares and Tata Capital Growth Fund will sell 4.9 million shares. In other words, this IPO does not involve a fresh issue of shares.
This is the second IPO filed by the conglomerate since the listing of TCS in the year 2004. Earlier, Tata Play had filed a pre-filed RHP with the market regulator and became the first company to do so under the new regulations.
The size of the IPO whose proceeds will go to the selling shareholders wasn’t disclosed, however, the company’s recent buyback valued the company at ₹ 16,080 crores. Experts say that going by that valuation, the offer size could be at least ₹ 3,800 crores.
The lead book-running managers to the issue are JM Financial, BofA Securities and Citigroup Global Markets India Pvt. Ltd.
Financials
Tata Technologies reported a revenue of ₹ 3,052.29 crore for the nine-month period ending December 2022, translating to a growth of 15.5% on a year-on-year (YoY) basis. It posted a profit of ₹ 407.5 crores during the same period. The company’s service segment contributed 88% to the total revenue. It has a paid-up share capital of ₹ 811.83 crores and an authorized share capital of ₹ 350 crores.
Written by Simran Bafna
