Tata Technologies Ltd has filed a draft red herring prospectus with Securities and Exchange Board of India to raise funds via initial public offering (IPO). The IPO is purely an offer for sale by the promoter Tata Motors and two other existing shareholders and doesn’t involve any fresh issue of shares.
“We wish to inform you that Tata Technologies, a subsidiary of Tata Motors Limited, has informed the company that it has today filed a draft red herring prospectus dated March 9, 2023 with the Securities and Exchange Board of India for an initial public offering,” Tata Motors said.
The issue comprises a pure offer for sale of up to 95.71 million shares by its existing promoters and shareholders. The OFS consists of up to 81.13 million shares by Tata Motors, up to 9.72 million shares by Alpha TC Holdings Pte and up to 4.86 million shares by Tata Capital Growth Fund I.
Currently, Tata Motors holds 74.69 percent stake in the firm while Alpha TC Holdings Pte has 7.26 percent stake. Tata Capital Growth Fund I has 3.63 percent stake in the company.
JM Financial Ltd, BofA Securities and Citigroup Global Markets India Pvt Ltd are the lead managers to the issue.
Tata Technologies, which counts Airbus SE, McLaren, Honda Motor and Ford Motor among its clients apart from Tata Motors and JLR, isn’t selling any new shares in the IPO. JM Financial, Citigroup Global Markets India and BofA Securities India will manage the share sale.
This is the second IPO proposed by the Tata Group since it listed Tata Consultancy Services in 2004. Satellite television operator Tata Play submitted a pre-filed draft red herring prospectus in December.
Led by company veteran Warren Harris, the Pune-based firm boasts a workforce of over 11,081 employees spread across 18 delivery centers in the US, Europe, India, China, Japan, and Singapore. Its competitors in the market include Cyient, Johnson Controls, Infosys, KPIT Technologies, and Persistent.
The company depends mostly on the Tata Group for business, especially Tata Motors and Jaguar Land Rover. However, Tata Tech has increased the share of business generated outside. Its non-captive account contribution increased to 64 per cent in FY22 from 46 per cent in FY20.
For the nine month ended December 2022, the firm reported a revenue of Rs 3011.79 crore against Rs 2607.30 crore a year ago. Net profit for the period stood at Rs 407.47 crore versus Rs 331.36 crore last year. Its service segment revenue contributed 88.43 per cent for the nine month period while 85.88 per cent for FY22 of the total revenue.
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