Tata Technologies Limited, a wholly-owned subsidiary of Tata Motors Limited, is gearing up to become the first Tata Group company to go public in nearly two decades, marking a significant event since the IPO of Tata Consultancy Services (TCS) in 2004. The offer-for-sale (OFS) is scheduled for November 22 and will conclude on November 24.
Tata Technologies Announces IPO
The IPO involves a total of 60,850,278 equity shares, with the OFS consisting of 46,275,000 shares by the company, 9,716,853 by Alpha TC Holdings Pte Ltd, and 4,858,425 by Tata Capital Growth Fund I. These represent 11.41%, 2.40%, and 1.20% of Tata Technologies Limited’s paid-up equity share capital, respectively, as disclosed in an exchange filing on November 13.
Originally filed with the Securities and Exchange Board of India (SEBI) on March 9, the IPO size was adjusted after Tata Motors divested 9.9% of its stake in Tata Technologies in October 2023, valuing the enterprise at Rs 16,300 crore (approximately $2 billion). The stake sale, driven by Tata Motors’ deleveraging agenda, saw TPG Rise Climate SF Pte acquiring 9% and the Ratan Tata Endowment Foundation taking the remainder, reducing Tata Motors’ stake to 74.69%.
The stake sale was part of Tata Motors’ strategy to reduce net automotive debt, with the September quarter showing a decrease to Rs 38,700 crore from the previous quarter’s Rs 41,700 crore. The company aims to achieve net debt-free status for its domestic business by FY24.
IPO Pricing Range Will Be Between Of Rs. 400-450
Anticipation surrounding Tata Technologies’ IPO has led to a surge in the company’s unlisted shares, reaching around Rs 900 from a modest Rs 90-100 in 2020. Market analysts project an IPO pricing range of Rs 475-500, considering the recent stake sale.
Foreign brokerage firm CLSA has revised Tata Motors’ target price to Rs 803 from Rs 777 following the stake sale. CLSA is optimistic about Jaguar Land Rover’s improved margins in H1FY24 and foresees Tata Motors dominating the Indian SUV segment with a projected 65.4% market share for FY25 and FY26. Additionally, CLSA predicts a rise in Tata Motors’ market share in the passenger vehicle segment to 16.1% by FY26.
Tata Motors reported a consolidated net profit of Rs 3,764 crore for the September quarter, attributing the positive results to the robust performance of its British arm, Jaguar Land Rover. This marks the fourth consecutive quarter of positive financial outcomes for the Indian automaker, a notable turnaround from the Rs 945 crore net loss in the corresponding quarter the previous year.