Tata IPOs always have a certain aura about them because they have rarely disappointed investors and stakeholders. It’s been 18 years since the Tata group came out with an IPO. The last IPO of a Tata group company was of Tata Consultancy Services (TCS) in the year 2004. Now, 18 years later, it looks there may be another major IPO from the Tata group. Tata Motors confirmed that its board of directors had given in-principle approval for partial divestment of their corporate investment in Tata Technologies. Tata Technologies is a global product engineering and digital services company, which will be the technology engine of the group in the future.
Tata Motors’ global product engineering, design and digital services subsidiary, Tata Technologies is planning to launch an IPO. Nearly five months after the reports of Tata Technologies’ IPO came out this year, the Tata group company has begun preparing for the IPO, and is expected to roll it out as early as the April- June quarter of next year, i.e. the first quarter of Financial Year 2023-24.
Tata Technologies is a global product engineering and digital services company, run by Warren Harris who is its MD & CEO. It focuses on four key verticals — automotive, aerospace, industrial machinery and industrials.
After tech behemoth TCS in 2004, no other Tata company has made a debut on the domestic bourses. As per Tata Motor’s 2022 annual report, it holds 74.43% stake in Tata Technologies. In 2018, Tata Motors had called off a deal to sell 43% stake in Tata Technologies to private equity firm.
Since Tata Motors would sell its stake through the IPO, the proceeds will help the reeling automaker recover its losses. The company reported a net loss to ₹945 crores for July-September, 2022, which was its seventh consecutive quarter of net loss.
For Tata Motors, the strategy would be to use this divestment to get to “zero net automotive debt” status by FY24. This was something the company had even mentioned in its FY22 annual report to shareholders. The company has been making losses for quite a few quarters mainly due to the pressure of profits on its international operations. The lower debt would enable the company to make productive use of its hidden assets in the form of group investments. Currently, Tata Motors has net auto debt, including leases, of Rs48,679 crores in FY22. This has risen sharply from Rs40,876 crores in FY21 and the first priority for the group is to cut down this debt at the earliest.