Tata Technologies sets price band for ₹3,042 crore IPO

Tata Technologies has set the price band for its much-awaited initial public offer (IPO) at Rs 475-500 per equity share. The issue opens for public subscription on November 22 and will close on November 24.

Tata Technologies is a leading global engineering services company offering product development and digital solutions to global original equipment manufacturers (OEMs). The company services include concept design, tear-down and benchmarking, vehicle architecture, body and chassis engineering, electrical and electronics systems, and diagnostics. It has a workforce of over 11,000 employees spread across 18 global delivery centres.

The IPO is book building and entirely an offer for sale (OFS) with the selling shareholders including promoter Tata Motors receiving the entire proceeds from the issue. Under the OFS, parent Tata Motors will sell 4.62 crore shares, Alpha TC Holdings will offload 97.1 lakh shares and Tata Capital Growth Fund will give up 48 lakh shares.

The issue size has been reduced from an earlier 9.57 crore shares to 6.08 crore equity shares now. The company had filed its IPO papers with Sebi in March this year and received approval from the regulator in June. Bids can be made for a minimum of 30 equity shares and in multiples of 30 equity shares thereafter. The issue size is estimated at Rs 2,890 crore – Rs 3,042 crore.

In the issue, Tata Technologies has reserved a 10% quota for Tata Motors’ eligible shareholders.

The weighted average of the cost of acquisition for Tata Motors is Rs 7.40/share; Rs 25.10 for investors Alpha TC Holdings and Tata Capital Growth Fund I according to the Draft Red Herring Prospectus (DRHP) filed by the company with Sebi.

Tata Tech was last valued at around $2 billion (Rs 16,300 crore), when TPG Climate picked up about a 9% stake in the company.

For the nine-month period ended December 2022, the company clocked 15% year-on-year (YoY) growth in revenue at Rs 3,052 crore. The service segment revenue contributed 88% of the total revenue. The company’s net profit during the same period stood at Rs 407 crore. Over FY 2021-23, its revenue grew at a compound annual growth rate (CAGR) of 30%, leading to a 46% EBITDA CAGR. PAT for the same period increased at a CAGR of 61.5%.

JM Financial, Citigroup Global Markets India, and BofA Securities India are the book-running lead managers to the IPO. The name of the registrar is Link Intime India Private Limited.

Bids can be made for a minimum of 30 equity shares and in multiples of 30 equity shares thereafter. The minimum bid amount for retail investors is Rs 15,000 while Rs 210,000 for non-institutional investors (NIIs). As for the qualified institutional buyers, it is Rs 1,005,000.

Axis Capital pegs the post issue market cap between Rs 19,269 crore and Rs 20, 283 crore.

The employee quota stands at 2,028,342 equity shares.

Indicative timeline

1) Finalistion of basis of allotment: On or about November 30

2) Initiation of refunds/unblocking of funds: December 12

3) Credit of shares into demat accounts: December 4

4) Listing: December 5

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Roy Walsh

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