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The Success Story of Tata Technologies IPO

By News Canvass | Nov 30, 2023

Tata Technologies IPO has made a major impact on its share price and its shareholders. Tata Technologies Limited is an Indian Multinational product engineering company that provides services in engineering and designs, product lifecycle management, manufacturing, product development, and IT service management to automotive and aerospace original equipment manufacturers as well as industrial machinery companies.

Tata Technologies was founded in  1989 as the automotive design unit of Tata Motors. It was separated from the parent company in the year 1994 , and Tata Motors continued to hold majority stake. Let us understand How Tata Technologies has continued the Tata Group Legacy so far.

Tata Technologies Journey So far

  • Tata Technologies 80% of the FY23 revenue came from outsourced engineering and digital transformation services and the remaining 20% came from technology solution like reselling third party software applications and services to educational institutions.
  • Tata Tech’s competitive advantage lies in its deep engineering expertise and its ability to provide end to end product development solution to its clients. The company’s engineering services are spread across the entire product development cycle from the conceptualization to the product launch Tata Technologies have a strong track record of successfully delivering it to its clients.
  • Tata Technologies have a global presence in more than 20 countries including in UK, Germany, China and India. The company provides cost effective engineering solutions to its clients while leveraging the best talent worldwide.

Industries that Tata Technologies works in

Tata Technologies works in Four major industries

  1. Automotive Industry
  2. Industrial Heavy Machinery
  3. Aerospace Industry
  4. Education Industry

Automotive Industry

  • Tata Technologies have developed more competitive products and solutions from time to time. They have reduced product time to reach market and also optimized product development costs. Customer experience has improved with Tata technologies over the years.
  • Tata Technologies have provided end to end solutions for future EVs cover engineering, manufacturing, and post sales services to deliver a great experience to the digital customer of the future. Their TREaD (Turnkey Research, Engineering, and Development) framework offers outsourced full-vehicle development solutions, from concept to reality, helping companies launch competitive vehicles faster.
  • Their IoT-led connected vehicle platform enables them to develop & deliver end-to-end connected services for passenger vehicles, commercial vehicles, and industrial heavy machines, as well as telematics solutions for fleet management. Deployed on over 7000+ vehicles, it enables manufacturing companies to deliver a great user experience.
  1. Industrial Heavy Machinery

Improving prediction accuracy:

  • Tata Technologies reporting and real-time analytics enable you to predict potential hurdles throughout the product lifecycle and make strategic decisions faster.

Enable end-to-end visibility across the product lifecycle:

  • The solutions cuts across physical and digital touchpoints to create seamless customer journeys, from design to after-sales.
  1. Aerospace Industry
  • Tata Technologies provide best Aerospace Engineering Solutions with their comprehensive designing and solutions for the airframe, cabin interiors, tooling, plan to freighter conversion helps aerospace companies engineer better products at an optimal cost.
  • Their Model-based Systems Engineering (MBSE) solution is designed to enable companies to bridge gaps between physical and digital product designs and bring in a new level of visibility, connectivity, and traceability across every aspect of the system lifecycle.
  1. Education Industry
  • As manufacturers seek to accelerate towards Industry 4.0, they need engineers who can engineer products of the future and deliver effective digital transformation. To equip the next generation of talent with the required skills, businesses need a partner that offers the relevant training, resources and support.
  • Tata Technologies have developed upskilling tools, training and courses that leverage their manufacturing domain knowledge and bridge the gap between industry and academia. They work with colleges, universities and governments to equip the next generation of engineers and technicians with the skills that are required by the global manufacturing industry. They also offer a digital learning system through their proprietary iGET IT offering to corporations and individuals to address their training requirements.

TATA Technologies IPO

The key objectives of the IPO by Tata Technologies are as follows:

Raising Funds for Growth Plans:

  • One of the main objectives of the IPO is to raise funds to support the company’s growth plans. The fresh issue of shares will provide the necessary capital for the company to invest in new technologies, expand its offerings, and make potential acquisitions. The company plans to use the funds to focus on strengthening its capabilities in areas such as artificial intelligence (AI), machine learning (ML), and digital twin.
Providing an Exit Opportunity for Tata Motors:
  • Tata Motors, the parent company of Tata Technologies, plans to reduce its stake in the company by up to 26% through the offer for sale. This will provide Tata Motors with an exit opportunity and allow it to divest its stake in Tata Technologies. The IPO is expected to fetch a better valuation for Tata Motors compared to a sale to private equity firms.
Enhancing Brand Value and Visibility:
  • Going public through an IPO can enhance the brand value and visibility of a company. It can help to establish the company as a credible player in the market and improve its reputation among stakeholders, including customers, employees, and investors. The IPO will provide Tata Technologies with an opportunity to showcase its expertise and capabilities in the engineering and product development digital services space.

Broadening the Investor Base: 

  • Going public can help a company to broaden its investor base and increase the liquidity of its shares. The IPO by Tata Technologies is expected to generate strong interest from institutional and retail investors, both in India and abroad. This will provide the company with a diverse set of investors and increase the visibility of its shares in the market.

Tata Technologies zooms 168%, becomes best listing in last 2 years

  • Tata Technologies, a subsidiary of Tata Motors (TML), made an impressive market debut on Thursday, November 30, listing at a 140% premium to the issue price of ₹ The ₹3,042-crore IPO of Tata Technologies garnered bids worth over ₹1.5 lakh crore. The overall subscription was nearly 70 times the shares on offer. The qualified institutional buyers led the bidding process, subscribing 203.41 times the allotted quota, while the quota reserved for retail individual investors (RIIs) was subscribed 16 times, and NII 62.11 times.
  • The employees of Tata Technologies and the shareholders of Tata Motors bought 3.7 times and 29.2 times their allotted quota, respectively. According to analysts, the strong response to the issue was due to attractive valuations as compared to its peers and Tata lineage, which enjoys strong brand value.
  • The IPO comprised of a 100% offer for sale (OFS) of 6.08 crore equity shares, which means that the company did not receive any proceeds from the IPO. However, Tata Technologies is a cash-generating company and had cash worth $150 million on its books at the end of the financial year 2023. Analysts peg the post-issue market cap between ₹19,269 crore and ₹20,283 crore.
  • Tata Technologies is a pure-play manufacturing-focused engineering research and development (ER&D) company, primarily focused on the automotive industry. The company’s revenue and profit after tax demonstrated a CAGR of 36% and 62%, respectively, from FY21 to FY23. In the first half of FY24, there was a 34% and 36% year-on-year growth in revenue and PAT. Robust earnings growth is anticipated moving forward. Tata Technologies has outpaced Tata Elxsi, L&T Technologies, and KPIT Technologies in revenue CAGR over the last three years. At an upper band valuation of ₹500, the issues valued at a PE ratio is 32.5 times based on FY23 EPS. The ₹3,042.51 crore issue of Tata Technologies, the first IPO listingin nearly two decades from the Tata Group, is also the best listing since November 2021 for an IPO size of greater than ₹500 crore. The last IPO from the Tata Group was Tata Consultancy Services in 2004.
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