TATA Tech IPO: Key Details, Objectives, Risks 2023
TATA Technologies Limited is conducting a public share offering from November 22, 2023, to November 24, 2023. Each share is priced in the range of ₹450 to ₹500 and has a face value of ₹2. Investors can purchase a minimum of 30 shares for ₹15,000. The total value of this offering is ₹3,042.51 crores, comprising a fresh issue of ₹3,042.51 crores.
Key Details
| IPO Date | November 22, 2023 to November 24, 2023 |
| Listing Date | - |
| Face Value | ₹2 per share |
| Price | 475-500 |
| Lot Size | 30 |
| Total Issue Size | 60,850,278 shares |
| Offer for Sale | 60,850,278 shares of ₹2 |
| Issue Type | Book Built Issue IPO |
| Listing at | BSE, NSE |
About the Company
Tata Technologies, as a part of the esteemed Tata Group in India, stands out as a leader in digital engineering and development services. They specialize in key areas that drive innovation and efficiency in today's tech-driven landscape:
Engineering and Research & Development (ER&D): The company excels in engineering research and development, especially in sectors like automotive, aerospace, and industrial heavy machinery. Their services span from design and testing to the full development of products, showcasing a deep commitment to technical excellence and innovation.
Product Lifecycle Management (PLM): Tata Technologies plays a crucial role in managing the life journey of a product. This includes everything from its inception, through design and manufacturing, to its eventual retirement. They leverage PLM software to create digital twins of physical products, enabling simulations and optimizations even before the creation of actual prototypes, thus saving costs and enhancing efficiency.
Enterprise IT Solutions: Understanding the backbone of modern business, Tata Technologies provides robust IT services. This includes enterprise resource planning (ERP) systems, alongside application development and maintenance, ensuring that businesses have the digital infrastructure necessary to thrive.
Consulting and Services: Beyond just technology, Tata Technologies is a trusted advisor in product development and IT strategy. Their consulting services aim to enhance operational efficiency, accelerate market entry, and optimize costs, proving their commitment not just to technological solutions, but to the overall growth and success of their clients.
Details of the Offer for Sale by the Selling Shareholders
| NAME OF THE SELLING SHAREHOLDERS | TYPE | NUMBER OF EQUITY SHARES OFFERED / AMOUNT |
| Tata Motors Limited | Promoter Selling Shareholder | Up to 46,275,000 Equity Shares |
| Alpha TC Holdings Pte. Ltd | Investor Selling Shareholder | Up to 9,716,853 Equity Shares |
| Tata Capital Growth Fund I | Investor Selling Shareholder | Up to 4,858,425 Equity Shares |
Risks
Competition Within the Group: The company faces competition from its own group companies that operate in similar markets. This internal rivalry could potentially hinder the company's ability to expand and seize new business opportunities.
Vulnerability to Currency Fluctuations: The company's financial performance is susceptible to changes in currency exchange rates, as it operates in various international markets. Fluctuations in these rates could significantly impact the company's financial health and operational efficiency.
Dependence on Major Clients: A significant portion of the company's revenue, approximately 72.75%, is generated from its top five clients, including Tata Motors Limited and its subsidiaries. If these key clients experience business downturns or reduce their transactions with the company, it could lead to a substantial decline in revenue, affecting the company's business operations and financial stability.
Heavy Reliance on the Automotive Sector: The company's revenue is highly dependent on clients in the automotive sector. Economic challenges or downturns in this sector could adversely impact the company's business performance, financial condition, and operational results.
Company’s Financials
Revenue Breakdown by Geography
| Region | 2023 | % of Revenue from Operations | 2022 | % of Revenue from Operations |
|---|---|---|---|---|
| India | ₹ 1,313.83 | 29.76% | ₹ 1,143.54 | 32.40% |
| Europe | ₹ 1,007.62 | 22.83% | ₹ 859.01 | 24.34% |
| North America | ₹ 946.53 | 21.44% | ₹ 792.16 | 22.44% |
| Rest of World | ₹ 1,146.18 | 25.97% | ₹ 734.85 | 20.82% |
Revenue Breakdown by Segments
| Expenses | 2023 (In ₹ Millions) | 2022 (In ₹ Millions) |
| Purchase for technology solutions | ₹ 6,824.80 | ₹ 6,885.40 |
| Outsourcing and consultancy charges | ₹ 5,696.56 | ₹ 3,998.03 |
| Employee benefits expense | ₹ 19,294.61 | ₹ 15,126.94 |
| Finance costs | ₹ 179.81 | ₹ 218.98 |
| Depreciation and amortization expense | ₹ 945.54 | ₹ 857.10 |
| Other expenses | ₹ 4,116.46 | ₹ 2,828.81 |
| Total expenses | ₹ 37,057.78 | ₹ 29,915.26 |
Total Expenses
| Expenses | 2023 (In ₹ Millions) | 2022 (In ₹ Millions) |
| Purchase for technology solutions | ₹ 6,824.80 | ₹ 6,885.40 |
| Outsourcing and consultancy charges | ₹ 5,696.56 | ₹ 3,998.03 |
| Employee benefits expense | ₹ 19,294.61 | ₹ 15,126.94 |
| Finance costs | ₹ 179.81 | ₹ 218.98 |
| Depreciation and amortization expense | ₹ 945.54 | ₹ 857.10 |
| Other expenses | ₹ 4,116.46 | ₹ 2,828.81 |
| Total expenses | ₹ 37,057.78 | ₹ 29,915.26 |
Client Concentration
| Client Concentration | September 30, 2023 |
| $50 million + | 3 |
| $20 million + | 3 |
| $10 million + | 6 |
| $5 million + | 10 |
| $1 million + | 38 |
Competitor Analysis
| Name of the company (Listed Peer) | Face Value (₹ per share) | Revenue from operations for Financial Year 2023 (₹ million) | P/E for Financial Year 2023 (3) | Market capitalization as on March 31, 2023 (In ₹ million) |
| Tata Technologies Limited | 2 | 44,141.77 | N.A. | N.A |
| Listed peers | ||||
| KPIT Technologies Limited | 10 | 33,650.38 | 80.31 | 250,097.45 |
| L&T Technology Services Limited | 2 | 80,136.00 | 37.47 | 356,802.39 |
| Tata Elxsi Limited | 10 | 31,447.23 | 61.55 | 371,111.53 |