Tata Technologies is a global product engineering and digital services company.- The IPO is a complete offer for sale (OFS) by the promoter Tata Motors and two other existing shareholders.
- Tata Technologies received over 40% of its revenues from its anchor clients in FY22.
Tata Technologies is a global product engineering and digital services company, run by CEO, Warren Harris. It focuses on four key verticals — automotive, aerospace, industrial machinery and industrials.
The IPO will completely be an offer for sale (OFS) by the promoter Tata Motors and two other existing shareholders. The issue does not involve any fresh issue of shares.
The OFS includes sale of 9.57 crore shares representing approximately 23.6% of paid up share capital.
On December 12, 2022 Tata Motors board had accorded in-principle approval to explore the possibility of partial divestment in its subsidiary Tata Technologies via an IPO route, at an opportune time.
So far, Tata Motors holds 74.69% stake in Tata Technologies while Alpha TC Holdings Pte owns 7.26%, while Tata Capital Growth Fund owns 3.63% stake in the company.
After tech behemoth TCS in 2004, no other Tata company has made a debut on the domestic bourses.
Tata Technologies gets 40% of its revenues from Tata Motors and JLR
Tata Technologies has a global workforce of over 11,081 employees spread across 18 global delivery centers in Asia Pacific, Europe and North America.
However, the company mostly depends on the Tata Group for business with its anchor clients being Tata Motors and
“We continue to derive a material portion of our revenues from our top 5 clients by revenue generated in Fiscal 2022 (“Top 5 Clients”) which include Tata Motors (our Promoter) and certain of its subsidiaries (other than JLR) (collectively, “Tata Motors”) and JLR (JLR and Tata Motors together, the “Anchor Clients”),” said the company in its DRHP.
The company received over 40% of its revenues from its anchor clients in FY22, which has come down from 51% in FY21 and 54% in FY20.
The company’s profitability has increased 74% in the last three financial years.
Tata Motors to benefit from the IPO
$4to sell 43% stake in Tata Technologies to private equity firm Warburg Pincus for $360 million, citing delays in securing regulatory approvals.
Since Tata Motors would sell its stake through the IPO, the proceeds will help the reeling automaker recover. In the quarter ending December 2022, Tata Motors reported a net profit of ₹2,958 crore after seven quarters of loss.
Tata Motor’s subsidiary Jaguar Land Rover has been struggling with semiconductor shortages, which has been impacting its performance for the last five-to-six quarters.
A delay in the recovery of its British subsidiary JLR due to continuing chip shortages has resulted in the company scaling back its guidance for FY23.
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