Tata Technologies IPO – Key Info

The Tata Technologies IPO is currently awaiting a finalized date for its market launch, as the company has submitted its Draft Red Herring Prospectus (DRHP) to SEBI. Through this IPO, Tata Technologies aims to raise approximately ₹[.] crores by offering up to 95,708,984 equity shares with a face value of ₹2 each. The Offer for Sale component comprises up to 81.13 million equity shares from Tata Motors, up to 9.72 million equity shares from Alpha TC Holdings Pte, and up to 4.86 million equity shares from Tata Capital Growth Fund I. The allocation for retail investors is set at 35%, while Qualified Institutional Buyers (QIBs) are allotted 50%, and High Net Worth Individuals (HNIs) are allocated 15%.

Tata Technologies Limited is a renowned global engineering services company that specializes in providing comprehensive product development and digital solutions. Their client base primarily consists of global original equipment manufacturers (OEMs) and tier-1 suppliers in various industries.

The company is driven by a mission to create substantial value for their customers by actively participating in the development of products that prioritize safety, environmental sustainability, and enhanced quality of life for end-users.

Tata Technologies has cultivated extensive domain expertise, particularly in the automotive industry, which has enabled them to excel in serving clients in related sectors, including aerospace, transportation, and heavy construction machinery. Their deep knowledge and experience in these industries contribute to their ability to deliver high-quality engineering and technological solutions to a diverse range of clients, fostering innovation and progress across multiple sectors.

In 2005, Tata Technologies made a significant move by acquiring 100% equity in INCAT International UK, expanding its global presence and capabilities.

In 2011, the company successfully secured funding through Alpha TC Holdings Pte. Ltd. and Tata Capital Growth Fund I, which provided crucial financial support for its growth and development.

In 2012, Tata Technologies demonstrated its commitment to innovation by unveiling the electric Mobility (eMO) vehicle at the North American International Auto Show, emphasizing its dedication to advancing electric mobility solutions.

In 2013, Tata Technologies continued its expansion strategy by acquiring Cambric Holdings Inc., further strengthening its position in the engineering and design services industry.

In 2017, the company pursued its growth trajectory with the acquisition of Escenda Holding AB by Tata Technologies Europe, consolidating its presence in the European market and expanding its offerings in the engineering and technology sector.

Tata Technologies holds the distinction of being the 15th largest IT company in the Fortune India Infotech Industry ranking. They have a global presence, operating in 25 countries, and boast a workforce of over 11,000 employees, including approximately 4,000 professionals worldwide. The company’s headquarters are located in Pune, India, with regional headquarters situated in the United States. This expansive reach and dedicated workforce allow Tata Technologies to provide their engineering services and solutions on a global scale.

Overview of the industry in which Tata Technologies operates based on the provided data:

Global Engineering Research and Development (ER&D)

• In 2021, the global ER&D spending reached an estimated $1,635 billion.
• North America leads in global ER&D spending and is expected to experience the fastest growth, primarily driven by the presence of software and internet companies.
• The ER&D services addressed market encompasses spending by global capability centers (GCCs) and outsourcing to third-party engineering service providers (ESPs).
• The global ER&D addressed market was estimated to be in the range of $145-155 billion in 2021.

Opportunity for India

• India has become a preferred destination for outsourced ER&D spending by global enterprises. This is due to India’s abundant talent pool, innovation ecosystem, cost-effectiveness, maturing in-house R&D centers, and geopolitical support.
• The Indian ESP (Engineering Service Provider) market is expected to grow at a Compound Annual Growth Rate (CAGR) of 13-16%, making it the second-fastest-growing region after Eastern Europe, which has a YoY growth rate of 16-18%.
• India’s ESP market is projected to reach $20 billion, accounting for nearly 1/4th of the overall outsourced ER&D spending, which was estimated at $85-90 billion in 2021.

Global ER&D Market Across Verticals

Automotive:

• The automotive industry’s ER&D spending is significant, totaling $167 billion in 2021. This sector includes both original equipment manufacturers (OEMs) and Tier-1 suppliers.
• The automotive ER&D spending is the largest contributor among manufacturing verticals, representing approximately 10% of the overall ER&D spending.
• It is expected to grow at a Compound Annual Growth Rate (CAGR) of around 6%, reaching $207 billion by 2025.

Aerospace & Defense:

• The aerospace and defense industry is experiencing growth, driven by increased global travel demand and the adoption of digital technologies.
• ER&D spending for this sector was $50 billion in 2021 and is projected to reach $54 billion by 2025.

Transportation & Construction Heavy Machinery (TCHM):

• The global ER&D spending in the Transportation & Construction Heavy Machinery sector was estimated at $41 billion in 2021.
• It is expected to grow to $45 billion by 2025.
• The outsourced ER&D market for TCHM service providers is currently valued at $2-3 billion and is anticipated to grow to $3-4 billion by 2025.

These insights suggest a promising outlook for Tata Technologies, especially in India, as it operates within an industry with substantial global ER&D spending and opportunities for growth across various verticals, including automotive, aerospace, and transportation & construction heavy machinery.

Here are the details for the Tata Technologies IPO:

• IPO Open: In 2023 (specific dates not provided)
• IPO Close: In 2023 (specific dates not provided)
• IPO Size: Approximately 95,708,984 Equity Shares
• Offer for Sale: Approximately 95,708,984 Equity Shares
• Face Value: ₹2 Per Equity Share
• IPO Price Band: The price band is not specified in the information provided.
• IPO Listing on: BSE (Bombay Stock Exchange) and NSE (National Stock Exchange)
• Retail Quota: 35%
• QIB Quota: 50%
• NII (Non-Institutional Investor) Quota: 15%
• Discount: Information about any discount is not provided in the details.
• DRHP (Draft Red Herring Prospectus): [Link not provided]
• RHP (Red Herring Prospectus): [Link not provided]

Please note that the specific IPO price range and dates are not mentioned in the provided information, so it’s important to refer to the official IPO documents and announcements from Tata Technologies or regulatory authorities for the most accurate and up-to-date information about the IPO.

Tata Technologies IPO Market Lot

Application	Lot Size	Shares	Amount
Retail Minimum	1	–	₹-
Retail Maximum	13	–	₹-
S-HNI Minimum	14	–	₹-
B-HNI Minimum	68	–	₹-

Tata Technologies IPO Allotment & Listing Dates, Refunds

The Tata Technologies IPO date is 2023 and the close date is 2023. The Tata Technologies IPO allotment will be finalized on 2023 and the IPO listing on 2023.

Price Band Announcement:	–
Anchor Investors Allotment:	–
IPO Open Date:	–
IPO Close Date:	–
Basis of Allotment:	–
Refunds:	–
Credit to Demat Account:	–
Tata Technologies IPO Listing Date:	–

Tata Technologies Financial

Particulars (in Rs. Crores)	FY22	FY21	FY20
Revenue	35,295.80	23,809.11	28,520.55
EBITDA	6,944.64	4,305.36	5,153.64
PAT	4,369.91	2,391.73	2,515.67

Particulars (in Rs. Crores)	FY22	FY21	FY20
Total Assets	42,179.99	35,727.35	449.6
Share Capital	418.07	418.07	418.07
Total Borrowings	19,378.38	14,305.81	7,203.74

Tata Technologies IPO Key Points

Tata Technologies has several notable strengths that contribute to its position as a leading global engineering services company:

1. Deep Expertise in the Automotive Industry: Tata Technologies has established itself as a key player in the automotive sector. Its extensive experience and knowledge in this industry enable the company to offer specialized services and solutions tailored to the unique needs of automotive manufacturers and suppliers.
2. End-to-End Solutions for EV Development: In response to the growing demand for electric vehicles (EVs), Tata Technologies provides comprehensive solutions covering all aspects of EV development, from design and engineering to manufacturing and after-sales services. This positions the company well in the rapidly evolving automotive market.
3. Strong Digital Capabilities: Tata Technologies leverages its robust digital capabilities, which include proprietary accelerators and cutting-edge technology, to enhance its service offerings. These digital tools enable efficient product development and design processes, contributing to its competitive advantage.
4. Diversified Global Presence: The company’s diversified global presence across Asia Pacific, Europe, and North America provides it with access to a wide range of markets and clients. Partnering with some of the world’s largest manufacturing enterprises further solidifies its position in the industry and offers opportunities for growth and collaboration on a global scale.

These strengths collectively contribute to Tata Technologies’ ability to meet the evolving needs of its clients, navigate industry changes, and maintain its reputation as a trusted provider of engineering and digital solutions.

Tata Technologies faces several notable risks that could impact its operations and financial performance:

1. Customer Concentration Risk: The company’s heavy reliance on its top 5 customers for a significant portion of its revenue poses a risk. If any of these key clients were to reduce their business with Tata Technologies or face financial difficulties, it could have a substantial impact on the company’s financial stability and revenue.
2. Dependency on the Automotive Industry: Tata Technologies’ primary dependence on the automotive sector for its revenue exposes it to the cyclical nature of this industry. Economic downturns or disruptions in the automotive sector can directly affect the company’s business operations, cash flow, and revenue.
3. Uncertainty in the EV Sector: As Tata Technologies offers end-to-end solutions for electric vehicle (EV) development, it is exposed to the uncertainties and rapid changes within the EV market. Factors such as shifts in consumer preferences, regulatory changes, or intense competition in the EV sector could impact the demand for the company’s services and solutions.

It’s important for investors and stakeholders to be aware of these risks when considering their investment in Tata Technologies. The company’s ability to mitigate these risks and adapt to changing market conditions will play a crucial role in its long-term success and sustainability.

How does Tata Motors gain from the IPO of Tata Technologies?

Tata Motors is set to benefit from the upcoming Initial Public Offering (IPO) of Tata Technologies, which is estimated to be valued at around Rs 20,000 crore. Tata Motors currently holds a stake in Tata Technologies worth approximately Rs 15,000 crore. They plan to sell 81.13 million shares during the IPO, which is expected to yield around Rs 4,000 crore in proceeds.

This IPO offers multiple advantages for Tata Motors. Firstly, it allows them to unlock the value of their stake in Tata Technologies, potentially leading to an increase in the stock price to around Rs 40 per share. Additionally, the proceeds from this share sale will assist Tata Motors in reducing its debt, aligning with their broader goal of becoming debt-free in the automotive sector in the coming years.

Furthermore, Tata Motors is well-positioned to improve its financial performance, as China reopens and the worst of the semiconductor chip supply issues seem to be in the past. These factors combined create a positive outlook for Tata Motors, promising potential wealth creation for investors in the future.

Peer Group

Company Promoters

• Tata Motors Limited

IPO Registrar:

Link Intime India Private Limited Address: C 101, 1st Floor, 247 Park, L.B.S Marg, Vikhroli West, Mumbai 400 083, Maharashtra, India Phone: +91 810 811 4949 Email: tatatechnologies.ipo@linkintime.co.in Website: www.linkintime.co.in

IPO Lead Managers:

1. JM Financial Ltd
2. BofA Securities
3. Citigroup Global Markets India Pvt Ltd

Company Address:

Tata Technologies Limited Address: Plot No. 25, Rajiv Gandhi Infotech Park, Hinjawadi, Pune 411 057, Maharashtra, India Telephone: +91 20 6652 9090 Contact Person: Vikrant Gandhe (Company Secretary and Compliance Officer) Email: ipo@tatatechnologies.com Website: www.tatatechnologies.com

Conclusion

Tata Technologies is making history as the first company within the Tata Group to go public on the stock exchanges since TCS’s IPO in 2004. With the reputable Tata brand and the strong financial standing of Tata Technologies, there is anticipation of a favorable response once the IPO becomes available to the public.

This IPO represents a significant and positive development for Tata Motors, serving dual purposes of unlocking the value of their stake and reducing their debt burden. It not only marks a milestone for the Tata Group but also holds the potential to contribute to Tata Motors’ financial well-being.