Tata Technologies is preparing for its first initial public offering (IPO) in nearly two decades, with an addendum filed with the Securities and Exchange Board of India (SEBI) on Friday. The IPO will involve the sale of up to 9.57 crore equity shares held by Tata Motors (NYSE:TTM), Alpha TC, and Tata Capital Growth Fund I. Financial firms JM Financials, Citi, and BoFA Securities are assisting with this process.
Despite a slowdown in FY23, Tata Technologies reported revenue of Rs 4,418 crore and profit after tax of Rs 708 crore. The company has shown strong performance in recent years, achieving compound annual growth rates (CAGRs) of 30% and 61.5% for revenue and profit respectively over FY21-23. The company is debt-free and offers product development and digital solutions in industries like aerospace and transportation.
The IPO is set to reduce the promoter group's pre-IPO stake from 76.7% to 56.7%, thereby increasing public ownership to 43.3%. This move comes amidst the ongoing IPO market buzz in 2023.
Experts have forecasted the IPO price range to be between ₹280 to ₹320. Vinit Bolinjkar from Ventura Securities sees engineering research and development (ER&D) companies like Tata Tech as having superior prospects compared to traditional IT services firms, thus meeting investor expectations.
Concerns over potential impact on Jaguar Land Rover (JLR) sales volumes due to weak global sentiments have been raised. Nevertheless, the company's EBITDA margin stands at par with industry standards, indicating its robust financial health.
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