IPO NOTE : Tata Technologies Ltd By Nirmal Bang
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BACKGROUND
Incorporated in 1994, Tata Technologies Ltd (TTL), part of the Tata Group & subsidiary of Tata Motor, is a pure-play manufacturing focused ER&D company, primarily focused on the automotive industry .TTL is currently engaged with 7 out of the top 10 automotive ER&D spenders and 5 out of the 10 prominent new energy ER&D spenders in 2022. The company have a diversified global client base from India, Europe, North America and the rest of the world. Repeat business stands at 97.72% in H1FY24. As of September 30, 2023, the company had 12,451 employees, comprising 11,608 full-time employees (“FTEs”) and 843 contracted employees
Details of the Issue:
The public issue consists of Offer for sale of ~Rs 3043 cr by Promoter (Rs 2314 cr) and selling shareholder (Rs 729 cr)
Tata Motor Shareholder Application:
Tata Motor Shareholder can apply in Shareholder category upto Rs 200000 and also in public category
Investment Rationale:
* Benefiting from Strong Parentage
* Diversifying client base by developing new customer relationships
* Growth in the industry, with higher penetration will lead to growth for the company
* Strong financials
Valuation and Recommendation:-
Over FY20-23 Sales grew by 15.7% and came at Rs 4414 cr in FY23. H1FY24 sales came at Rs 2526.7cr (+33.8% YoY). EBit margins have also improved from 13% in FY20 to 16.5% in FY23. Going ahead The automotive outsourced ER&D market is pegged at $18-20 billion and is expected to grow at a CAGR of 11 % and reaching USD 27- 29 bn By 2026E.The company being a pure-play manufacturing focused ER&D company, primarily focused on the automotive industry , will be benefit from the growth in the industry .The company plans to strengthen relationships with existing clients, target new high potential accounts with large annual ER&D spends and new energy vehicle companies, to drive the growth. ROE and ROCE also improved and stood at 20.9% and 24.3% respectively for FY23
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SEBI Registration number is INH000001766
