Tata is back with a new IPO nearly after 2 decades! Will Tata Technologies IPO be a game changer for Tata Motors?
The buzz around Tata Group is in full swing as the company makes a groundbreaking move after nearly two decades. Yes, you read that right!
Tata Group is all set to launch its Initial Public Offering (IPO) after almost 19 years. With its reputation as one of the largest and most successful conglomerates in India, the news of the IPO has stirred up excitement in the business world.
The last time a Tata Group company went public was in 2004 with Tata Consultancy Services (TCS), which has since become one of the most valuable IT brands globally.
So, what does this upcoming IPO mean for Tata Group, and why is it such a significant step? Let’s dive in!
Tata Motors’ subsidiary, Tata Technologies, made an important announcement on 9th March 2023, when it submitted its Draft Red Herring Prospectus (DRHP) to SEBI. According to the DRHP, Tata Technologies plans to sell 9.571 crore shares, representing 23.6% of its paid-up share capital, in an offer for sale.
Tata Technologies is known for its engineering and design expertise. The company serves automotive and aerospace original equipment manufacturers and their suppliers. It offers services in product lifecycle management, manufacturing, product development, and IT service management. The company operates in various regions worldwide, including North America, Europe, the Middle East, and Asia-Pacific.
In December 2022, the board of Tata Motors greenlighted a proposal to sell some of its stake in Tata Technologies via an IPO. Notably, Tata Motors won’t be the only seller, as two other existing shareholders will also sell their shares. Tata Motors plans to offer 8.113 crore shares, while Alpha TC Holdings Pte and Tata Capital Growth Fund-I will sell 97.20 lakh shares and 48.6 lakh shares, respectively, from their holdings.
Apart from this, Tata Motors currently holds a majority stake of 74.69% in Tata Technologies, while Alpha TC Holdings Pte and Tata Capital Growth Fund hold 7.26% and 3.63% stakes, respectively.
Why is Tata Coming Up With an IPO Now?
As per the Times of India, the IPO for Tata Technologies serves a crucial purpose for its parent company, Tata Motors. By selling its equity stake in Tata Technologies, Tata Motors can improve its finances and reduce its debt burden. Over the years, Tata Motors has invested Rs 224.1 crore in Tata Technologies. The company has been grappling with losses at its Jaguar Land Rover unit and poor financial performance of its domestic business.
The upcoming public issue will bring fresh cash flow to Tata Motors, ultimately strengthening its margins and balance sheet. The move is expected to significantly impact the company’s financial health, helping it navigate the challenging business environment.
Date and Price of the IPO
As of now, Tata Technologies has not announced the date for its IPO. Industry experts speculate that SEBI may grant approval for the IPO application in the current quarter, followed by a two-month timeline for the IPO.
Based on market analysis by Live Mint, the estimated market capitalisation of Tata Technologies stands at around Rs 10,852 crore. However, the company is yet to disclose the issue price for its IPO.
That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!
*The article is for information only. This is not investment advice.