Tata Technologies has fixed the price band for its upcoming initial public offer (IPO) at ₹475-500 per share with a lot size of 30 equity shares and its multiples thereof. The much-awaited public offer of the Tata Group entity will run for subscription from November 22 to November 24.
However, it is important to note that GMPs are just an indicator of how the company’s shares are stacked up in the unlisted market and are subject to change rapidly.
The IPO, which is a first from the Tata Group in nearly two decades after Tata Consultancy Services (TCS), is completely an offer-for-sale (OFS) of 6.08 crore equity shares with a face value of ₹2 each.
Under the OFS, parent Tata Motors will offload 4.62 crore shares, Alpha TC Holdings will sell 97.1 lakh shares and Tata Capital Growth Fund will also sell 48 lakh shares. Since its an OFS issue, the company will not receive any proceeds from the offer.
About 50% of the issue has been set aside for qualified institutional bidders, while quotas reserved for retail investors and non-institutional investors stand at 35% and 15%, respectively.
Considering the upper end of the price band, the IPO size is estimated at ₹2,890 crore – ₹3,042 crore. Axis Capital pegs the post issue market cap between ₹19,269 crore and ₹20, 283 crore.
Tata Technologies is in talks with Morgan Stanley, Blackrock, and some other US hedge funds to invest in its public offer at a valuation of $2.5 billion, according to a Reuters report.
The company had filed its IPO papers with Sebi in March this year and received approval from the market regulator in June. The issue size has been reduced from an earlier 9.57 crore shares to 6.08 crore equity shares now.
Key concerns
Below are the key risk factors highlighted by Tata Technologies in its prospects:
– Client concentration: Most of the company’s revenue comes from its top five clients, or anchor clients in particular. A loss of any of the top five clients or a deterioration in their financial position could result in a substantial loss of revenue for the company, according to its DRHP.
– Rupee exposure: Nearly three-quarters of Tata Technologies’ revenue comes from other currencies like the US Dollar, British Pound, Yuan, Euro, Singapore Dollar and the Swedish Krona. For the first nine months of last year, the figure stood at 65.1 percent.
JM Financial, Citigroup Global Markets India, and BofA Securities India are the book-running lead managers to the issue, while Link Intime India Private Limited is the registrar.
Basis of allotment is likely on November 30 and credit of equity shares to demat will be on December 1. The equity shares of the company will be listed on both the BSE and the NSE on 4 December.
Company profile
Tata Technologies is a global engineering services company that offers product development and digital solutions, including turnkey solutions to global original equipment manufacturers (OEMs) and their tier-I suppliers globally.
The company has more than 9,300 employees and JLR and Tata Motors as its captive clients. For the financial year 2022, the company reported revenue growth of 46%, the strongest in its history.
Tata Technologies posted its highest ever revenue growth of 46% year-on-year for the previous financial year.
For the first nine months of the current financial year, the company’s revenue and net profit has grown in double-digits compared to the same period last year. Operating margin has also seen expansion of nearly 300 basis points to 19.2%.
First Published: Nov 16, 2023 8:07 AM IST
Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
