BW Explains: Tata Motors To Zoom With Tata Technologies IPO, All You Need To Know
This one is big news for the Tata Group investors. After nearly two decades, the Tata Group is all set to come out with its Initial Public Offering (IPO). Tata Technologies, a subsidiary of Tata Motors, has filed papers with the Securities and Exchange Board of India (SEBI) for bringing its IPO.
It is after 19 years that the Tata Group would be out in the market with its IPO all over again. Last time, the group had come out with the IPO for Tata Consultancy Services which was listed in 2004. According to sources in the market, the Tata Tech IPO will include 95,708,984 equity shares for cash, or around 23.60 per cent of its paid-up share capital.
Since Tata Motors announced it will separate its technical business division, the Tata Technologies' IPO has been the most anticipated. Investors have been wondering how the initial public offering (IPO) of Tata Technologies will affect Tata Motors ever since the company submitted the necessary paperwork. Let us decode it all at BW Explains.
What Is The IPO All About ?
The initial public offering (IPO) consists of an offer for sale of up to 81,133,706 equity shares by Tata Motors, up to 9,716,853 equity shares by Alpha TC Holdings, and up to 4,858,425 equity shares by Tata Capital Growth Fund I, each of which could represent up to 20 per cent, 2.40 per cent, and 1.20 per cent of Tata Technologies' paid-up share capital, respectively.
How Will It Benefit Tata Motors ?
Around 75 per cent of the subsidiary is owned by Tata Motors, and as part of this offering, the firm hopes to sell 8.1 crore of its shares. Taking a look at the most recent buyback in order to examine the value Tata Technologies holds, it will be clear how it will benefit Tata Motors. The stock was last valued at Rs. 198 per share at that time
The valuation of the Tata Motors subsidiary is estimated to be approximately Rs 8,000 crore considering the entire number of shares being offered. Tata Motors is only selling 8.1 million of its 30.3 million shares in this deal, which has a stake valued at Rs 6,100 crore. Tata Motors is therefore anticipated to receive 1,600 crore from this IPO. The automaker is anticipated to pay off its debt with this money.
Tata Tech’s Revenue In Recent Times
Revenue for Tata Technologies was Rs 3,578 crore in FY22 and Rs 3,052 crore during the first nine months of FY23. Tata Tech is valued at Rs 8,000 crore at the low end of the P/E multiple, which is lower than rivals like Cyient, KPIT Tech, Zensar Tech, and L&T Tech that are publicly traded. It is valued at Rs 16,300 crore on the high end.
The IPO of Tata Technologies and the shares of Tata Motors are viewed favourably by market professionals. The IPO, which is anticipated to go public in the next two to three months, is anticipated to offer Tata Motors a significant boost.
