Tata Technologies to Go Public on November 22, Marking a Milestone for Tata Group

Tata Technologies Limited, a wholly owned subsidiary of Tata Motors Limited, is gearing up to become the first Tata Group company to go public in nearly two decades. This milestone move comes as the issue of up to 60,850,278 equity shares is set to close for bidding on November 24, 2023. The upcoming initial public offering (IPO) by Tata Technologies is a significant development, representing the first IPO from the Tata Group since the successful launch of Tata Consultancy Services (TCS) in 2004.

Also See: Tata Technologies IPO GMP

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IPO Details and Offer-For-Sale (OFS)

The IPO will consist of an offer-for-sale (OFS) of up to 60,850,278 equity shares. Tata Technologies Limited will offer up to 46,275,000 equity shares, Alpha TC Holdings Pte Ltd will offer up to 9,716,853 equity shares, and Tata Capital Growth Fund I will offer up to 4,858,425 equity shares. These shares collectively represent up to 11.41 percent, 2.40 percent, and 1.20 percent, respectively, of the paid-up equity share capital of Tata Technologies Limited. The bidding process for the OFS will conclude on November 24, 2023.

Tata Technologies IPO

Pruning the Issue Size

The initial issue size was reduced after Tata Motors sold 9.9 percent of its stake in Tata Technologies to new investors in October 2023, valuing the company at approximately $2 billion or Rs 16,300 crore. TPG Rise Climate SF Pte, a climate-focused private equity fund, acquired 9 percent of the stake, with the remaining portion being purchased by the Ratan Tata Endowment Foundation. Before the stake sale, Tata Motors held a 74.69 percent stake in Tata Technologies. This move was in line with Tata Motors’ “deleveraging agenda” and its aim to reduce automotive debt, making its domestic business net debt-free by FY24.

Also See: Upcoming IPO in India

Market Anticipation and Brokerage Views

The anticipation surrounding the IPO was reflected in the surge in Tata Technologies’ unlisted share price, which rose significantly from modest levels in 2020 to approximately Rs 900. The expected pricing range for the IPO is between Rs 400-450, taking into consideration the recent 9.9 percent stake sale by Tata Motors.

Foreign brokerage firm CLSA increased Tata Motors’ target price to Rs 803 from Rs 777 following the stake sale in Tata Technologies. CLSA expects that Tata Motors’ British brand, Jaguar Land Rover, will report better margins for H1FY24 and predicts a strong SUV pipeline in 2024. Additionally, CLSA anticipates continued market share gains for Tata Motors in the Indian SUV segment over the next two years, with Tata Motors’ SUV share estimated to reach 65.4 percent for FY25 and FY26. The firm also foresees an increase in market share for Tata Motors in the passenger vehicle segment to 16.1 percent by FY26.

Strong Financial Performance

Tata Motors reported a consolidated net profit of Rs 3,764 crore for the September quarter in 2023, continuing its positive financial trend for the fourth consecutive quarter. This robust performance was largely attributed to the strong showing of its British subsidiary, Jaguar Land Rover. This achievement marked a significant turnaround from the consolidated net loss of Rs 945 crore in the corresponding quarter of the previous year.

The forthcoming IPO of Tata Technologies represents a significant moment in the Tata Group’s history, marking the return of the conglomerate to the public markets after nearly two decades. It also underscores Tata Motors’ efforts to strengthen its financial position and capitalize on the growing opportunities in the automotive industry.

Investors and market enthusiasts alike are eagerly awaiting the bidding process for Tata Technologies’ shares, which will commence on November 22, 2023, and conclude on November 24, 2023. This historic IPO is expected to have a profound impact on the Indian capital markets and the Tata Group’s future growth trajectory.

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