Tata Tech IPO: 6 things to know about the company ahead of D-St debut
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Much-awaited issue
The initial public offering (IPO) of Tata Technologies, one of the most awaited issues this year, received regulatory approval in June. The dates for the launch are yet to be known. Here are the key things to know about this company ahead of the issue. (Source: Anand Rathi)
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IPO Details
Face Value: Rs 2/share
-Issue Details: Offer for sale of 95.7 million equity share
-Issue Details: Offer for sale of 95.7 million equity share
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Shareholding Pattern (%)
Promoter groupPre-IPO: 76.7 | Post-IPO: 56.7
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Non-promoter group
Pre-IPO: 23.3 | Post-IPO: 43.3
About the Company
Focusing on verticals like auto (75% of overall revenue) and aero (part of Others, 10% of revenue), Tata Tech is a mid-size ER&D services company with $547 million in revenue. It has long-term collaborations with anchor clients (Tata Motors and JLR, 40% of auto revenue) and offers turnkey vehicle development solutions for combustion and electric powertrains.
Besides, it offers manufacturing cost reduction and after-sales solutions. It has 19 delivery centres. In aero, it recently won a contract from Airbus, assuring growth ahead. EBITDA margins are 18-19%, likely to improve along with offshoring and utilisation. It has $124 million net cash and generates a 22% RoE (a two-year average).
About the Company
Focusing on verticals like auto (75% of overall revenue) and aero (part of Others, 10% of revenue), Tata Tech is a mid-size ER&D services company with $547 million in revenue. It has long-term collaborations with anchor clients (Tata Motors and JLR, 40% of auto revenue) and offers turnkey vehicle development solutions for combustion and electric powertrains.
Besides, it offers manufacturing cost reduction and after-sales solutions. It has 19 delivery centres. In aero, it recently won a contract from Airbus, assuring growth ahead. EBITDA margins are 18-19%, likely to improve along with offshoring and utilisation. It has $124 million net cash and generates a 22% RoE (a two-year average).
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Comprehensive Automotives Portfolio
The company offers services like concept design, tear-down and benchmarking, vehicle architecture, body and chassis engineering, electrical & electronics systems, and diagnostics. Its other services are smart manufacturing and data solutions for end-to-end solutions for OEMs and tier-1s. Overall, in the last two years, automotive has grown fast (judged by FY23 revenue growth). Besides anchor clients, Vinfast is a large auto client for the company (Vietnam brings 23% of revenue). Vinfast, recently listed in the US, is in the top 20 auto companies in the world.
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Aero Vertical Most Notable
The company helps design, engineer, and validate aircraft and provides solutions for structures, engines, systems, interiors, and MRO. Besides aerospace, it operates in transportation and heavy construction machinery)
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Technology Solutions
Within technology solutions (TS) (20% of revenue in FY23), the company has a product business (72% of TS revenue), including reselling software used by manufacturing companies on PLM and MES. Its education business (28% of TS revenue) focuses on reskilling corporates and government institutes.
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Financial Performance
Over FY21-23, revenue clocked a 30% CAGR, leading to a 46% EBITDA CAGR, translating to a 61.5% PAT CAGR. Net cash in FY23 was Rs 10,290 million and RoE was 24%.