The up to 60,850,278 equity shares that are up for auction will conclude on November 24. The successful 2004 launch of Tata Consultancy Services would be the first initial public offering (IPO) for the Tata Group.
Tata Technologies will become the first Tata Group company to go public in almost two decades:
With an offer for sale on November 22, Tata Technologies Limited, a wholly owned subsidiary of Tata Motors Limited, will become the first Tata Group firm to go public in almost 20 years.
After TCS went public in 2004, this will be the Tata Group’s first initial public offering. On November 24, the Tata Tech OFS will close.
The up to 60,850,278 equity shares that are up for auction will conclude on November 24. According to the company’s exchange filing on November 13, the OFS will consist of up to 46,275,000 equity shares held by the company, up to 9,716,853 held by Alpha TC Holdings Pte Ltd, with Tata Capital Growth Fund I holding up to 4,858,425 of it. These amounts correspond to up to 11.41 percent, 2.40 percent, and 1.20 percent, respectively, of Tata Technologies Limited’s paid-up equity share capital.
The Securities and Exchange Board of India (Sebi) received the company’s draft IPO documents on March 9.
Stake sale
Following rumors that in October 2023, Tata Motors sold 9.9 percent of the firm to new investors at an enterprise valuation of Rs 16,300 crore (about $2 billion), the issue size was reduced. The Ratan Tata Endowment Foundation received 19% of the proceeds, and TPG Rise Climate SF Pte, a climate-focused private equity fund that had previously invested $1 billion in Tata Motors’ electric mobility company, received the remaining 9%. Prior to the equity sale, Tata Motors owned 74.69 percent of Tata Technologies.
The automaker’s “deleveraging agenda” made the stake sale necessary, the firm stated in a filing on October 13. The automaker’s net automotive debt dropped to Rs 38,700 crore in the September quarter from Rs 41,700 crore in the prior quarter, and it was on track to achieve net debt freedom for its domestic business by FY24.
Moneycontrol’s announcement in October of Tata Technologies’ intention to go public that same month gave the unlisted share price of the company a boost. In 2020, the unlisted shares of Tata Technologies, which were once trading at a reasonable Rs 90-100, experienced a significant increase to over Rs 900. Manan Doshi, the co-founder of Unlisted Arena, asserted that, in view of Tata Motors’ most recent 9.9 percent equity sale, the IPO will likely be priced between Rs 400 and Rs 450.
Brokerage views
Based on the last valuation round, foreign brokerage company CLSA increased Tata Motor’s target price from Rs 777 to Rs 803 after the stake sale in the IPO-bound Tata Technologies.
The company predicted higher profit margins for the British division of the manufacturer, Jaguar Land Rover, for the first quarter of 2024, and indicated that the Indian carmaker will have a robust SUV pipeline by that same year. According to CLSA, Tata Motors’ SUV share will be 65.4% in FY25 and FY26. The company also projects that share gains in the Indian SUV category would continue over the following two years. CLSA projects that its market share in the passenger vehicle segment would increase to 16.1% by FY26.
The financials
The carmaker announced a consolidated net profit of Rs 3,764 crore for the September quarter on November 2, citing strong results from Jaguar Land Rover, its British division. This is the domestic auto major’s fourth consecutive quarter of triumph. In the same quarter of previous year, the domestic automaker reported a consolidated net loss of Rs 945 crore.
