After nearly two decades, a Tata group company is each set to test the Indian public requests. Tata Motors attachment Tata Technologies has filed its draft red herring prospectus( DRHP) with request controller Securities and Exchange Board of India( Sebi) for an original public immolation( IPO). Sources estimated the IPO size at around Rs,000 crore.
India’s IT trendsetter Tata Consultancy Services( TCS) was the last Tata group establishment to go public. TCS came out with its IPO in July 2004 and its shares got listed the following month.
Pune- grounded Tata Technologies ’ proposed IPO will involve secondary trade of over to95.7 million shares, constituting23.6 per cent of the company.
protagonist Tata Motors is unpacking81.1 million shares( 20 per cent stake), Alpha TC effects will vend9.7 million shares(2.4 per cent stake) and Tata Capital Growth Fund another4.9 million shares(1.2 per cent stake).
The IPO will be of significance to Tata Motors, which has committed to spend$1.8 billion in the EV member during 2022- 27.
Besides funding its growth plans, the capital raised from the Tata Technologies IPO will also allow the company to lighten its debt burden. Tata Motors has plodded financially in the last many times due to losses at its Jaguar Land Rover( JLR) unit and poor fiscal performance of its domestic business. The company reported a net loss at consolidated base in the last four successive times since 2018- 19. The trend has continued in the current financial. Tata Motors reported consolidated net loss of Rs3051.3 crore during the first nine- months of FY23.
A combination of poor profitability and capex at its domestic and JLR division has redounded in a significant rise in Tata Motors ’ debt. The company reported consolidated gross debt of Rs1.44 trillion at the end of September 2022( HIFY23), over from Rs1.06 trillion at the end of FY2018- 19. The debt figure includes the borrowing of its vehicle finance unit. The company has also not paid equity tip since 2015- 16.
A partial monetisation of its equity stake in Tata Technologies will ameliorate Tata Motors ’ finances. Tata Motors has cumulatively invested Rs224.1 crore in Tata Technologies, according to Capitaline database.
Tata Technologies, led by Warren Harris, has been furnishing global engineering services to global guests. These services include product development and digital services to original outfit manufacturers. Some of the crucial verticals which it serves are bus including EVs, aerospace, transport and construction.
The company’s profit from operations for the nine- months period ended December 31, 2022 and December 31, 2021 was Rs3011.79 crore and Rs2607.3 crore, independently. The number of workers( both full time workers and contracted labor force) at the company has grown from,620 as of March 31, 2020, to,081 as of December 31, 2022.
Tata Motors and JLR are among the top five guests for Tata Technologies. It also counts VinFast, a southeast Asian EV OEM, among its most important guests.
Tata Technologies operates in the engineering and product development space, which has been growing at a fast pace. The global ER&D( engineering, exploration and development) spend for 2021 was roughly$1.64 trillion and is anticipated to grow to roughly$2.28-2.33 trillion by 2025. The ER&D spend outsourced to third party service providers reached$ 85-$ 90 billion in 2021 and is anticipated to grow at a 10- 12 CAGR between 2021 and 2025, according to a Zinnov report mentioned in the establishment’s red herring prospectus.