Tata Tech gets SEBI approval to launch Tata Group’s first IPO in 20 years

Capital market regulator SEBI has approved the much-awaited initial public offering (IPO) of Tata Technologies, which would be the first public issue from the Tata Group after nearly two decades. The regulator has also approved the IPOs of Gandhar Oil Refinery and SBFC Finance.

In March this year, Tata Technologies, a subsidiary of Tata Motors, filed a draft document with the Securities and Exchange Board of India (SEBI) to launch an IPO. The public issue by the engineering and product development company will be 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 nearly 20 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.

As per the draft red herring prospectus (DRHP) filed with SEBI, the issue comprises OFS of up to 95.71 million shares, representing around 23.60% of its paid-up share capital of the company, 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 ₹407.47 crore profit 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.

In November last year, Tata Play, previously known as Tata Sky, had filed a draft red herring prospectus (DRHP) with the SEBI under the confidential pre-filing to launch its public offer. It is the first company in India to take a confidential pre-filing route for its IPO. The direct-to-home platform got its observation letter on April 26, which implies a green signal to launch the IPO.