Tata group gets ready to launch Tata Tech IPO, plans to raise Rs 5,000 cr

Group to launch IPO after a gap of 19 years

After a gap of almost 19  years, the Tata group is getting ready to list a  company from the group’s stable as it gets ready to launch the initial public offer of Tata Technologies by September-end or early October to raise up to Rs 5,000 crore. The IPO of Tata Technologies is being launched as the bankers received positive response during the initial discussions with potential institutional investors, say bankers.

The last IPO from the Tata group was of India’s largest software exporter, Tata Consultancy Services in July 2004 which has a market valuation of Rs 12.39 trillion as on Thursday.

Tata Technologies, a subsidiary of Tata Motors, was set up in 1996 by Tata group’s former chairman, Ratan Tata, to cash in on the opportunity in the product engineering and manufacturing IT space.  The group will sell 95.7 million, or 23.6 percent of its existing capital in the IPO, said a banker close to the transaction. Of this, Tata Motors will sell up to 81.1 million of shares while the rest will give an exit to an existing private equity player based in Singapore – Alpha TC Holdings. TTL has a presence in more than 25 countries through its 17 global delivery centres (GDC).

The Tata group did not reply to an email seeking comment on the IPO plans.

Both Tata Motors and its overseas subsidiary Jaguar Land Rover are captive customers of the company and have contributed 40 per cent of the consolidated  income of  the company in the previous financial year. Going ahead, analysts  expect the revenue growth to be driven largely by non-captive customers and state government orders supported by an improved demand environment for the automotive segment. The sharp rise in demand for electric vehicles (EVs) is expected to help the company in widening its customer base.

A banker said Tata Sons, which owns a 62 per cent stake in the company, is in talks with Temasek to buy out the Singapore fund’s 20 per cent stake in Tata Play and a decision is expected soon.

The group, however, has delayed the plan to launch the IPO of satellite TV broadcaster, Tata Play after it slipped into a loss in this financial year . Tata Play in FY22 had reported a revenue of Rs 4,741 crore and a profit of Rs 68.60 crore. "Tata Play was planning to launch an initial public offer of shares in the festival season to raise up to Rs 4,000 crore and with the company reporting losses, the investors' sentiment may dampen," said a banker.

Bankers said Tata Play’s listing will be a valuation catalyst for its rival Airtel DTH which has 8 per cent higher Ebitda (earnings before interest, taxes, depreciation and amortisation), bankers have said. Last year the company had filed a confidential draft prospectus  with the SEBI and was the first Indian company to take the option to file share sale offer documents without making any information public.