India’s Tata Technologies is looking to list itself on the local stock exchanges bourses through a INR14 billion (INR1,400 crore) IPO. Tata Technologies is the engineering solutions and IT product developing subsidiary of Tata Motors. The automaker holds nearly 70.4% equity stake in Tata Technologies, while other investors include Alpha TC (8.7%), Tata Capital, Barclays Wealth Corporate Services, Sheba Properties, Tata Entertainment Overseas and Walbrook Nominees. Alpha TC is a wholly-owned subsidiary of the partnership sponsored by Mizuho Securities and other international investors.
If Tata Technologies brings its IPO, it will be first public sale of shares from the diversified Tata group in 12 years. The group, which comprises nearly 100 companies now, last brought the IPO of Tata Consultancy Services in 2004. This will be Tata Technologies’ second attempt to raise public funds as a similar plan in 2008 was dropped due to poor market conditions. If Tata Technologies IPO moves forward, it can help unlock value in Tata Motors as well.
Like other group companies, Tata Technologies started as a captive unit, supporting Tata Motors’ automotive business. However, it has come a long way since its start in 1994 and now gets earns more than 30% of its revenue from North America, Europe and the Asia-Pacific region. With its roots in the automotive business, the business still accounts for nearly 65% of Tata Technologies’ revenues while 12% comes from aerospace. The rest is contributed by industrial machinery and other businesses. Tata Technologies posted a 3.6% increase in revenues in FY2016 to INR26.8 billion while profits grew 14.3% to INR3.8 billion.
Tata Technologies not the only one exploring IPO market
Tata Technologies’ interest in the IPO market is not surprising considering the growing activity in the primary market. So far, 10 companies have raise more than INR67 billion from IPOs, extending the gains seen last year when 21 companies got listed on the main board exchanges.
Apart from Tata Technologies IPO, Tata Group has reportedly revived the IPO plans for its DTH arm Tata Sky. Several media reports this year indicated that Tata Group chairman Cyrus Mistry is pushing for INR20 billion IPO for the company to reduce debt levels. Tata Sky was close to file a prospectus with SEBI last year but deferred the plans following lukewarm institutional response.