There could not have been a more opportune time for the launch of the IPO of Tata Technologies Ltd. Investors were waiting for this issue for a long time and see that this IPO was subscribed 6.55 times on the very first day. Interestingly, the IPO of Tata Technologies was fully subscribed within 36 minutes of its opening on Wednesday.
Tata Group has come up with IPO after almost 2 decades. Tata Group had earlier brought the IPO of Tata Consultancy Services (TCS) in 2004.
Big bet in future on ER&D segment
According to a report by Zinnov, the global spending on the ER&D segment i.e. Engineering Research & Development, in which Tata Technologies works, will increase at the rate of 10% in the next 5 years and thus This will reach approximately 2.7 trillion dollars.
The automotive sector is the largest vertical in ER&D. Under this, the company provides end to end services and software to automobile companies from engineering, design to execution.
Due to increasing demand for electric mobility in the coming years, there is going to be huge investment in ER&D. According to the report, global automakers can spend 1.2 trillion dollars by 2030.
Tata Technology earns two-thirds (2/3) of its total income from the automotive sector. The company believes that they are fully prepared to take advantage of this change in global patterns.
Details related to IPO:
- IPO opens: 22 November
- IPO closes: 24 November
- OFS: 60,850,278 shares
- Issue size: Rs 3,042 crore
- Price Band: Rs 475-500/share
- Face value: Rs 2/share
- Lot Size: 30 shares (after this you can buy more shares in multiples of 30 only)
- Listing: BSE and NSE
The company will issue pre-IPO placement on November 21.
Shareholding Pattern
Subscription Status
- Day 1: Subscribed 6.55 times
- Institutional investors: 4.08 times
- Non-institutional investors: 11.69 times
- Retail investors: 5.42 times
- Employees (Reserved): 1.10 times
- Shareholders (reserved): 9.30 times
Raised Rs 791 crore from anchor investors
Tata Technologies has raised Rs 791 crore from its anchor investors before the IPO. The company allotted 1.58 crore shares at Rs 500 per share to 67 anchor investors. These investors include Fidelity International, Nippon Life India, BNP Paribas, SBI Mutual Fund, HSBC, Kotak, DSP, Motilal Oswal, Edelweiss and Goldman Sachs. SBI Multi Asset Allocation Fund received the highest allocation of 4.30%.
Company’s business model?
Tata Technologies, established in 1994, is a global engineering services company, which provides product development and digital solutions. The company primarily focuses on the automotive industry.
The company has relationships with 7 of the top 10 automotive ER&D investors. Apart from this, the company has relationships with 5 out of the top 10 investors in New Energy ER&D.
Two types of business operations
1) Services: The company provides outsourced engineering services and digital transformation services to global manufacturing clients to help them deliver better designed products. The services line generated income of Rs 3,521 crore and Rs 1,986 crore in FY23 and H1 FY24 respectively.
2) Technology Solutions: This also has two parts:
- Through its product business, Tata Technologies sells third-party software applications, which primarily include product life-cycle management software and solutions. Apart from this, the company also provides value added services like consulting, implementation, system integration and support.
- Through its education business, the company provides ‘Phygital’ education solutions in manufacturing skills. Under this, public and private sector employees are made skilled in the latest engineering and manufacturing technologies through the iGetIT platform.
The Technology Solutions segment contributed Rs 883 crore and Rs 540.3 crore to the company’s income in FY23 and H1 FY24, respectively.
