Tata Technologies IPO - Investment Rationale, Issue Details, Strategies, Financials, Risks: IDBI Capital

IDBI Capital's IPO Report

Tata Technologies Ltd. will launch its initial public offering on November 22, 2023 and the issue will close on Nov 24. The company has set a price band in the range of Rs 475 to Rs 500 per equity share. The minimum order quantity is 30 shares and in multiple thereof.

The Rs 3,000-crore issue comprises only an offer-for-sale by the promoter and investors.

Key investment rationale:

• Deep expertise in the automotive industry.

• Robust strategy and healthy margin expansion.

• Balance mix of growth.

Competitive strengths:

• Deep expertise in the automotive industry.

• Differentiated capabilities in new age automotive trends electric vehicles.

• Marquee set of clients across anchor accounts, traditional OEMs and new energy vehicle companies.

• Global delivery model enabling intimate client engagement and scalability.

About the company

Tata Technologies range of services includes Information Technology Consultancy, systems applications and products in data processing implementation, computer-aided design and computer- aided manufacturing engineering and design consultancy.

It generates ~80% from services, 11% from products and 9% from dducation as of FY23. Vertical wise the company generates majority of revenues from automotive (which is seeing healthy traction led by disruption).

Apart from automotive, it will be key beneficiary of tailwinds in aerospace led by capacity expansion plans of aircraft manufacturers and maintenance, repair and operations activities. Its revenue and profit after tax has grown at a compound annual growth rate of 36% and 62% over FY21-FY23.

H1 FY24 has seen 34% and 36% YoY revenue and PAT growth and we expect robust earnings growth going forward. It is valued at ~33 times FY23 earning per share versus peer average of ~63 times FY23 EPS. Hence, we recommend 'Subscribe'.

Key risks:

A material portion of its revenues from their top five clients – company continue to derive a material portion of its revenues from their top five clients by revenue generated in Fiscal 2023.

If any or all of the top five clients were to suffer a deterioration of their business, cease doing business with the company or substantially reduce their dealings, company’s revenues could decline, which may have a material adverse effect on company’s business, results of operations, cash flows and financial condition.

Click on the attachment to read the full IPO report:

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.