There’s a massive software megatrend playing out in the industry — it’s called ACE.
There are Autonomous cars — which can automatically help you avoid a head-on collision. It involves Connected vehicles that are linked to the internet for your infotainment systems. And there’s a paradigm shift towards Electric vehicles due to environmental concerns.
But carmakers aren’t tech experts. And many of them don’t want to hire in-house teams to build all this electrification and tech stuff either.
So guess who wins?
Companies like Tata Technologies. They’re doing the hard work and helping auto manufacturers to outsource to innovate and launch products quicker.
But will its IPO draw investor attention given that Tata Elxsi, a rival from the house of Tata, is already listed on the stock exchanges? Is the IPO pricing too high? And the big question is if the market is actually large enough to accommodate all the players?
You can read this story by Finshots to learn more about Tata Technologies and its IPO.
What does Tata Technologies do?
Incorporated in 1994 as a part of the Tata Group, Tata Technologies is one of the leading global engineering services companies offering product development and digital solutions, including turnkey solutions, to global original equipment manufacturers (OEMs) and their tier-1 suppliers. It is a subsidiary of Tata Motors Ltd.
They mainly operate in the automotive industry and in adjacent industries, such as aerospace and transportation and construction heavy machinery (TCHM).
What is the issue size of Tata Technologies IPO?
The company is offering 6.085 crore equity shares aggregating up to Rs. 3,042.51 crores in its IPO comprising OFS by its promoter Tata Motors Ltd., Alpha TC Holdings, and Tata Capital Growth Fund.
What are the various shareholder categories one can apply?
| Category | Lot Range | Min Amount | Max Amount |
|---|---|---|---|
| Retail | 1 - 13 | 14250 | 195000 |
| Employee | 1 - 33 | 14250 | 495000 |
| Shareholder | 1 - 13 | 14250 | 195000 |
| HNI (Small) | 15 - 66 | 213750 | 990000 |
| HNI | 71 or more | 1011750 | NA |
Note: The minimum application amount is based on the lower end of the price band and the maximum amount is based on the upper end of the price band
What categories can eligible Tata Motors or DVR shareholders apply?
Those investors who have held Tata Motors or Tata Motors DVR shares on 13th November can apply in the following categories:
- Shareholder + Retail
(or) - Shareholder + HNI (Small)
(or) - Shareholder + HNI
Points to be noted:
- Although an eligible employee can bid up to 4.95 Lacs, bid amount up to 1.95 Lacs shall be considered in the first instance and the balance shall be considered only in case of under-subscription in the employee reservation portion.
Financials of Tata Technologies.
| Financial Year | Total Assets (₹ crores) | Total Revenue (₹ crores) | Profit After Tax (₹ crores) | EPS | EBITDA (₹ crores) |
|---|---|---|---|---|---|
| March 31, 2020 | 2,572.97 | 2,896.96 | 251.57 | 6.20 | 515.36 |
| March 31, 2021 | 3,572.74 | 2,425.74 | 239.17 | 5.89 | 430.53 |
| March 31, 2022 | 4,218.00 | 3,578.38 | 436.99 | 10.77 | 694.46 |
| March 31, 2023 | 5,201.49 | 4,501.93 | 624.04 | 15.38 | 908.69 |
Revenue break-up - Segment wise
| Particulars | FY23 | FY22 | FY21 | FY20 |
|---|---|---|---|---|
| Services Segment: | 80% | 75.12% | 80.40% | 82.16% |
| Automotive | 70.94% | 64.51% | 66.08% | 66.94% |
| Others | 9.05% | 10.61% | 14.32% | 15.22% |
| Technology Solutions | 20% | 24.88% | 19.60% | 17.84% |
Revenue break-up - Geography wise
| Particulars | FY23 | FY22 | FY21 | FY20 |
|---|---|---|---|---|
| India | 29.76% | 32.40% | 28.98% | 30.07% |
| Europe | 22.83% | 24.34% | 30.96% | 34.31% |
| North America | 21.44% | 22.44% | 31.86% | 30.03% |
| Rest of World | 25.97% | 20.82% | 8.20% | 5.59% |
Comparison with peers (FY23)
| Company | Revenue (Operations) | Profits | EBITDA | PE | EPS |
|---|---|---|---|---|---|
| LTTS | 8013.6 | 1169.80 | 1918.70 | 37.47 | 110.80 |
| KPIT Tech | 3365.03 | 386.86 | 675.65 | 80.31 | 14.10 |
| Tata Elxsi | 3144.72 | 755.20 | 1034.91 | 61.55 | 121.26 |
| Tata Tech | 4414.18 | 624.04 | 908.69 | NA | 15.38 |
Note: Revenue, Profits and EBITDA numbers are in crores
Risk factors to consider:
Competition from Group Companies: Certain Group Companies operate in a similar line of business, which may lead to competition with these entities and could potentially result in a loss of business opportunity for THE Company.
Susceptible to exchange rate fluctuations: Exchange rate fluctuations in various currencies in the company does business could materially and adversely impact the business, financial condition, and results of operations.
Dependence on Top 5 clients: As of December 31, 2022, the Company derives 72.75% of the revenue from its Top 5 Clients which include Tata Motors Limited, Tata Technologies’ Promoter, and certain of its subsidiaries. If any or all of the Top 5 Clients were to suffer a deterioration of their business, cease doing business, or substantially reduce their dealings, the revenues could decline, which may have a material adverse effect on the business, results of operations, cash flows, and financial condition.
Vulnerable to cyclicalities in the Automotive segment: The Company’s revenue is highly dependent on clients concentrated in the automotive segment. An economic slowdown or factors affecting this segment may have an adverse effect on the business, financial condition, and results of Operations.
Schedule/Timeline of Tata Technologies Limited IPO
| Issue Period | 22nd November to 24th November 2023 |
|---|---|
| Price band | ₹ 475 to 500 |
| Minimum Bid quantity | 30 & Multiples thereof |
| Deadline for accepting UPI mandate | Until 5 PM on the issue closing day |
| Finalization of Allotment | November 30, 2023 |
| Initiation of Refunds | December 1, 2023 |
| Credit of Shares | December 4, 2023 |
| Date of Listing | December 5, 2023 |
| Mandate end date | December 9, 2023 |
| Anchor Investors Lock-In End Date | December 24, 2023 |
How to apply to the Tata Technologies IPO?
You can apply for the Tata Technologies IPO using any supported UPI app by following two steps:
- Enter your bid on Kite
- Accept the UPI mandate on your phone
On acceptance of the mandate, the bid amount will get blocked in your bank account. Click here to learn more.
How to check the allotment status for Tata Technologies IPO?
You can check the allotment status for the Tata Technologies IPO on the website of the Registrar and Transfer agent. Alternatively, you can also check the allotment status on the NSE website.
