Tata Technologies bags Rs 791 crore from anchor investors ahead of IPO launch

Tata Technologies on Tuesday raised about Rs 791 crore in the anchor round ahead of the issue opening on Wednesday. The IPO, which closes on November 24, is the first from Tata Group since the debut of TCS.

The Board in consultation with book-running lead managers JM Financial, Citigroup Global Markets and BofA Securities finalised the allocation of 1.58 crore shares to anchor investors at Rs 500 apiece.

Some of the marquee funds which participated in the anchor round include Fidelity, HSBC, Goldman Sachs, JM Financial MF, Kotak MF, Axis MF, Motilal Oswal, Edelweiss MF, Mirae Asset among others.

The IPO was priced in the range of Rs 475-500, where investors can bid for a minimum of 30 shares in one lot.

At the upper price band, the issue size is about Rs 3,042 crore.

The public offer is entirely an offer for sale (OFS) of 6.08 crore shares, under which, Tata Motors, Alpha TC Holdings and Tata Capital Growth Fund will participate.

The weighted average of the cost of acquisition for Tata Motors is Rs 7.40 per share and Rs 25.10 for investors Alpha TC Holdings and Tata Capital Growth Fund I.

About 50% of the offer is reserved for qualified institutional buyers, 35% for retail investors and 15% for non-institutional investors. In the issue, Tata Technologies has also reserved a 10% quota for Tata Motors' eligible shareholders.

Tata Technologies is a pure-play manufacturing focused engineering research and development (ER&D) company, primarily focused on the automotive industry.

They are 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. Its primary services include providing outsourced engineering services and digital transformation services to global manufacturing clients helping them conceive, design, develop and deliver better products.

Some of the key strengths of the company include differentiated capabilities in new age automotive trends like electric vehicles, deep expertise in the automotive industry, a global delivery model which enables intimate client engagement and scalability among others.

Analysts value the company at P/E of 32.5x with a market cap of Rs 20,283 crore post issue of equity shares and return on net worth of 20.8%.

For the six months ended September period, the company's total income rose 35% year-on-year to Rs 2,587 crore and net profit was up 36% to Rs 352 crore in the same period.