Tata Technologies, a subsidiary of Tata Motors, has filed a draft document with market regulator Securities and Exchange Board of India (SEBI) to launch an initial public offering (IPO). The public issue by the engineering and product development company is completely an offer for sale (OFS) by its existing promoters and shareholders.
If Tata Technologies' public offer succeeds, it would be the first public listing by Tata group in over 18 years. Tata Consultancy Services (TCS) was the last company to go public in 2004, when Tata Sons sold part of its stake in the IT services firm to list the shares on the domestic stock exchanges.
“Tata Technologies Limited, a subsidiary of Tata Motors, 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 in a BSE filing on March 9.
As per the draft red herring prospectus (DRHP) filed with SEBI, the issue comprises OFS of up to 95.71 million shares by its existing shareholders. Of this, up to 81.13 million shares will be offloaded 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.
As per the current shareholding pattern, Tata Motors owns 74.69% stake in Tata Technologies, while Alpha TC Holdings Pte and Tata Capital Growth Fund I hold 7.26% and 3.63%, respectively, in the company.
JM Financial Ltd, BofA Securities, and Citigroup Global Markets India Pvt Ltd are the lead managers to the IPO.
The Pune-based Tata group company provides services in engineering and design, product lifecycle management, manufacturing, product development, and IT service management to automotive and aerospace original equipment manufacturers and their suppliers. The company has over 11,081 employees and 18 delivery centers in the U.S., Europe, India, China, Japan, and Singapore.
The company, which mostly relies on the Tata group for business especially Tata Motors and Jaguar Land Rover, has reported a net profit of ₹407.47 crore during the nine months ended December 2022, compared to ₹331.36 crore last year. During the period under review, revenue stood at ₹3,011.79 crore against ₹2,607.30 crore a year ago. Segment-wise, the service business contributed 88.43% to the revenue in 9M FY23, and 85.88% for FY22 of the total revenue.
