Tata Technologies IPO was the biggest public listing last year in terms of listing gains. It was the Tata Group’s first IPO in two decades. Given the Tata brand and the strong financials of the engineering services arm, investors and market enthusiasts took part in the debut with great enthusiasm and excitement.

In this article, we dive deeper into Tata Technologies’ share price and recent performance.

What Is The History Of Tata Technologies?

Tata Technologies, a player in the engineering services domain, especially in the automotive and aerospace sectors, has a rich history. Established in 1989 as the automotive design arm of Tata Motors, it was spun off separate entity just five years into its inception. This strategic move allowed Tata Technologies to diversify and venture into aerospace engineering and other innovative sectors.

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Historically, Tata Motors, which is Tata Technologies’ biggest shareholder and customer, had made attempts to offload its stake in Tata Tech, primarily to alleviate its debt burden. However, the landscape changed with the announcement of its IPO last year, which will did not channel fresh capital into Tata Tech but facilitated Tata Motors and two other investors in divesting their stakes.

How Did Tata Technologies IPO Perform?

Tata Technologies’ IPO and closed on Friday, November 24 and saw Tata Motors, Alpha TC Holdings and Tata Capital Growth Fund divest 6.08 crore equity shares, which was lower than the 9.57 crore shares they had originally planned to put on sale. The shares were priced at a cut-off of ₹500 per share.

10% of shares were be reserved for employees of Tata Technologies and Tata Motors shareholders.

Tata Tech’s IPO was oversubscribed 69.43 times by the end of the IPO window. The shares closed their first day of trading at ₹1314.25, giving shareholders a massive 162.85% listing gain.

What Is Tata Technologies Share Price?

As of Friday, January 12, Tata Technologies’ share price was trading at ₹1,169.30, which is still 133.86% higher than its original issue price. However, the stock has lost 10.94% in value since its listing day as the initial excitement around its listing wears off.

The stock currently has a price-to-earnings ratio of 75.8 and a market cap of ₹47,360 crore. The company has cash and cash equivalents of ₹815 crore and debt of ₹260 crore.

Despite its expansive growth and diversification, Tata Motors continues to be both its largest shareholder and its primary customer. An intriguing aspect of Tata Tech’s journey is its competitive dynamics. It perceives Tata Elxsi, another firm within the Tata conglomerate, as its competitor. This suggests a overlap in the services offered by both entities.

Tata Technologies: A Financial Snapshot

Performance Overview: Tata Technologies, in FY23, experienced a deceleration in its revenue and profit growth compared to the preceding fiscal year. Nevertheless, the company’s financial health remains robust, evident from its debt-free status. The revenue for FY23 surged by 25%, reaching a commendable Rs 4,418 crore. Furthermore, the profit after tax witnessed a significant jump, registering a growth of 63% to stand at Rs 708 crore.

Growth Metrics: Over the span of FY21-23, Tata Technologies demonstrated impressive growth rates. The company’s revenue showcased a compound annual growth rate (CAGR) of 30%. This robust revenue growth subsequently led to a 46% EBITDA CAGR. The culmination of these growth rates is reflected in the profit after-tax CAGR, which stands at a remarkable 61.5%.

Comparative Analysis: When juxtaposed with its industry peers, Tata Technologies emerges as a frontrunner, especially in terms of revenue growth. Over the last three fiscal years, its revenue CAGR has outpaced that of notable peers such as Tata Elxsi, L&T Technologies and KPIT Technologies. In terms of profitability, Tata Technologies’ EBITDA margin of 23.7% aligns closely with the industry benchmark.

Return Ratios: A pivotal indicator of a company’s financial efficacy is its return ratios. Tata Technologies’ Return on Equity (RoE) underwent a positive uptrend from 19.8% in March 2022 to 23.7% by March 2023. Similarly, the Return on Capital Employed (RoCE) showcased an upward trajectory, moving from 16.7% in March 2022 to 19.5% in March 2023.

Who Owns Tata Technologies?

Ownership dynamics offer insights into a company’s strategic direction. Tata Motors, the automotive giant, is the linchpin shareholder of Tata Technologies. However, the ownership landscape witnessed a shift with Tata Motors divesting a 9.9% stake before the IPO. This divestment was not uniform.

TPG Rise Climate SF Pte Ltd, a private equity fund with a climate-centric focus, acquired 9% of this stake. The remaining 0.9% found a home with the Ratan Tata Endowment Foundation, further solidifying the Tata Group’s interest in Tata Technologies.

Other investors include Tata Motors, Alpha TC Holdings and Tata Capital Growth Fund.

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