Tata Technologies IPO Review – Will this IPO Create Wealth for Investors?

Tata Technologies IPO starts offering on 22ndn.d. Tata Tech IPO news has been in the news for a while now. The IPO price band was finally fixed at Rs 475 to Rs 500 per share. Tata Technologies is a leading global engineering services company. The company has demonstrated significant revenue and profit growth in recent years.Should you invest? Tata Technologies IPO?This article provides further insight into the company’s business, IPO details, positive aspects, risk factors, and provides a complete review.?

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About Tata Technologies Limited

The company is one of the world’s leading engineering services companies. The company provides product development and digital solutions, including turnkey solutions, to his original equipment manufacturers and their Tier 1 suppliers worldwide.

The company’s endeavor is to create value for its customers by helping to develop products that are safer, cleaner and improve the quality of life for end customers. They have deep automotive industry expertise and use this expertise to serve customers in adjacent industries such as aerospace, transportation, and heavy construction equipment.

Our business activities are mainly classified as follows.

#1 – Service:

The company’s primary business is services, which include providing outsourced engineering and digital transformation services to help manufacturing customers around the world envision, design, develop and deliver better products. Masu. The services business contributed 35,311.55 million rupees and 19,863.9 million rupees in operating revenue for the fiscal year 2023 and the six months ended September 2023, respectively, accounting for 80.00% and 78.62% of the operating revenue for the respective periods. Ta.

#2 – Technology Solution:

These complement our service offerings with product and education businesses.

Through our Products business, we resell third-party software applications, primarily product lifecycle management software and solutions, and provide value-added services such as consulting, implementation, systems integration, and support.

The company’s education business provides ‘physical’ education solutions for manufacturing skills, including upskilling and reskilling in the latest engineering and manufacturing techniques, to public sector institutions through the provision of curriculum development and competency centers through its proprietary iGetIT platform. , to private institutions and businesses.

For the fiscal year 2023 and the six months ended September 30, 2023, the Technology Solutions business generated operating income of Rs 8,830.22 crore and Rs 5,403.12 crore, respectively, representing 20.00% and 21.38% of the operating income for the respective periods. accounted for %. .

Tata Technologies IPO date, price range and size

Purpose of Tata Technologies IPO

The IPO size is Rs 3,042.51 crore and is fully OFS. Under a sale offer, the proceeds would be paid to the selling shareholders and the company would receive nothing.

Tata Technologies Limited Financials

Tata Technologies IPO – Important dates

What is Tata Technologies’ IPO valuation?

• The IPO price range is between Rs 475 and Rs 500 per share.
• Considering last year’s FY23 EPS was Rs 15.37, the P/E ratio is 33 times.
• Considering the last three years’ weighted EPS of Rs 12.26, the P/E ratio is 41x.
• Listed peers such as KPIT Technologies have a P/E ratio of 80.3x (highest), L&T Technology’s P/E ratio is 37.5x (lowest), and the industry average P/E ratio is 59.7x. Therefore, an IPO price range of 33x to 41x P/E is reasonable.

Tata Technologies IPO Today’s GMP

As per livemint report, Tata Tech’s IPO GMP is 298+.

GMP, also known as gray market premium, is the premium at which an investor buys a stock above its IPO price in the offline market.

Why should you invest in Tata Technologies IPO?

• Tata Technologies is a subsidiary of Tata Motors, part of the Tata group of trusted brands.
• The company is a leading global engineering services company with deep expertise in the automation industry. A comprehensive portfolio of services for the automotive industry addresses the product development and enterprise optimization needs of traditional OEMs and new energy vehicle companies, and related supply chains.
• The company has differentiated capabilities in the new age automation trend EV.
• The company has experienced significant growth in sales and profit margins over the past three years.

Risk factors for investing in Tata Technologies IPO

Although there are some positive factors to buy this IPO, investors should also consider the negative or risk factors listed below.

• The purpose of the IPO is OFS only. In the case of a sale, the proceeds are paid to the selling shareholders and the company receives nothing.
• The company derives significant revenue from its top five customers, including Tata Motors (73% of FY23 revenue). Losing such customers can have a significant impact on a company’s revenue.
• The company’s revenue is dependent on its customers, which are concentrated in the automotive sector. Downward trends in this area may affect the company’s business.
• The company expects significant future revenue from new energy vehicle companies, many of which may be start-ups. Uncertainty regarding the overall strategy can have a negative impact on the company’s business.
• The Company invests in unsecured debt securities that may qualify for lower interest rates. As an example, the company’s intercompany deposits amount to Rs 116 million with interest rates ranging from 5% to 5.75%.
• The company has had negative cash flows in the past, and there is a possibility that negative cash flows will continue in the future, which may affect its liquidity and management.
• Please note that investors Tata Technologies IPO RHP Address both internal and external risk factors.

Also read: 10 large-cap investment trusts with the highest returns over the past five years

Should you invest in Tata Technologies IPO?

You may be wondering whether this IPO is good or bad for your investment.

• Tata Technologies is a subsidiary of Tata Motors. The company is a leading global engineering services company with deep expertise in the automation industry. The company has experienced significant increases in sales and profit margins in the past.
• Conversely, an IPO involves only OFS, whose funds are sold to shareholders and the company gains nothing. The company derives 40% of its revenue from Tata Motors and Jaguar Land Rover, and more than 70% of its revenue comes from its top five risky customers. The company expects future revenues to come through new energy vehicle companies, many of which may be startups. Uncertainty regarding such strategies also poses risks.

Investors who understand all these risk factors may consider investing in this IPO.

Suresh KP is the founder of Myinvestmentideas. He is a NISM Certified Investment Advisor and he is a NISM Certified Research Analyst. I have been analyzing financial markets for the past 20 years. He can be reached at suresh@myinvestmentideas.com.

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