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Tata Technologies IPO Analysis: Analysis and Overview

CA Aman Rajput , Last updated: 23 November 2023  
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Tata Technologies Limited, a subsidiary of the renowned Tata Group, is poised to make its mark on the public market with its initial public offering (IPO). The company, a leading global engineering and product development digital services provider, is expected to attract significant investor interest due to its strong track record, promising growth prospects, and association with the Tata Group.

Key Highlights of the IPO

  • Issue Size: The IPO comprises an offer-for-sale (OFS) of 60,850,278 equity shares, amounting to approximately Rs. 3,042.51 crores.
  • Price Band: The price band for the issue has been set at Rs. 475 to Rs. 500 per share.
  • Lot Size: The minimum lot size for an application is 30 shares, requiring an investment of Rs. 15,000 at the upper end of the price band.
  • IPO Dates: The IPO opens for subscription on November 22, 2023, and closes on November 24, 2023.
  • Listing: The shares are proposed to be listed on the BSE and NSE, with a tentative listing date of December 5, 2023.
Tata Technologies IPO Analysis: Analysis and Overview

Company Overview and Financial Performance

Tata Technologies has established a strong presence in the engineering and product development services domain, catering to a global clientele across diverse industries, including automotive, aerospace, industrial machinery, and consumer goods. The company's expertise lies in end-to-end product development, encompassing engineering design, digital manufacturing, and product lifecycle management.

Tata Technologies has consistently demonstrated financial growth over the years, with revenue and profitability steadily increasing. In FY23, the company recorded a revenue of Rs. 2,824 crores and a profit of Rs. 337 crores.

 

Strengths and Growth Prospects

Tata Technologies' strengths stem from its:

  • Strong brand recognition and reputation within the Tata Group
  • Global presence with delivery centers across 19 countries
  • Diverse client base spanning various industries
  • Expertise in end-to-end product development
  • Commitment to innovation and technological advancements
 

The company's growth prospects are further fueled by

  • Increasing demand for engineering and product development services driven by technological advancements and product complexity
  • Growing adoption of digital technologies in product development processes
  • Expansion into new markets and industries

PE Ratio Comparison with Same Industry Companies

Tata Technologies' P/E ratio is expected to range from 30.88X to 32.5X based on the price band. Compared to its peers, Tata Technologies' valuation appears attractive:

Company P/E Ratio
Tata Elxsi 69X
KPIT Technologies 110X
L&T Technology Services 40X

Investment Considerations

Investors considering investing in Tata Technologies' IPO should carefully consider the following factors:

  • Company's strong track record and financial performance
  • Promising growth prospects driven by increasing demand for engineering services and digital adoption
  • Association with the Tata Group, a well-respected conglomerate
  • Diversified client base and expertise across industries
  • Potential risks associated with global economic conditions and industry trends

Conclusion

Tata Technologies' IPO presents an enticing investment opportunity for those seeking exposure to a growing company in the engineering and product development services sector. The company's strong track record, promising growth prospects, and affiliation with the Tata Group make it a compelling proposition for investors with a long-term investment horizon. However, investors should carefully evaluate the associated risks and conduct their own due diligence before making any investment decisions.

Source: Personal research and Prospectus attached below

Do let me know in the comments, are you applying for the same?

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Published by

CA Aman Rajput
(Chartered Accountant)
Category Shares & Stock   Report

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