Tata Technologies: The next TCS?
Tata Consultancy Services (TCS) made a stellar debut on the stock exchanges in 2004, listing at a premium of 27% to its issue price of ₹850.
Ever since, the company’s shareholders as well as those who missed out on this life changing opportunity have been waiting with bated breath for the Tata group to launch another IPO of one of its many unlisted companies.
It seems the wait is finally over after 18 long years. On 12 December 2022, the Tata Motors’ board accorded, in principle, a partial divestment in Tata Technologies, its wholly owned subsidiary, through an IPO.
It looks like Tata Technologies could roll-out its IPO in 2023 and the buzz around it is getting louder by the day with some investors calling it the best kept secret of the Tata group.
In August 2021, Tata Technologies was trading at ₹2,800 per share in the unlisted shares market. The price has jumped 130% over the last year to over ₹6,500 per share.
Tata Technologies, headquartered in Pune, India was founded as a business unit of Tata Motors in 1989. Tata Motors has a 74.42% stake in Tata Technologies, according to the company’s 2022 annual report.
Tata Technologies provides engineering and development services, digital enterprise services, product lifecycle management, education offerings, and IT service management to businesses across automotive, aerospace, industrial machinery, and other industries. The company has over 10,000 employees and 18 global delivery centres, the company serves customers in 27 countries across North America, Asia-Pacific, and Europe.
The company covers every aspect of the value chain starting from product conceptualization to aftermarket maintenance repair, and operations.
As battery-powered electric vehicles will grow in popularity and market share during the next decade, Tata Technologies is in a sweet spot to make the most of this EV megatrend.
In FY2022, Tata Technologies was selected byAirbusas an engineering, manufacturing engineering and services strategic supplier to collaborate across multiple areas and geographies. With this, the company is looking at scaling up its presence in France, Germany, and Spain in the coming years.
For the year ended March 2022,Tata Technologiesrevenue was seen at ₹358 bn, along with an operating profit of ₹69.4 bn and profit after tax of ₹43.7 bn. The year saw a revenue growth of 47%, operating profit growth of 65%, and profit after tax growth of 74%. 2022 was the best financial year in the history of the company. Tata Technologies is a zero-debt company.
Tata Technologies’ revenue is expected to grow 69% to ₹60 bn by 2025, up from ₹35.8 bn during 2021-22, driven by an increase in demand in the electric vehicle space and its thrust in the aviation industry. The company is also looking at growth through mergers and acquisitions by actively scouting for targets, particularly in an effort to expand its defence footprint.
The company is also looking at increasing its non-automotive share from 12% currently to 18% over the next 3 years by vying for business in other sectors including aerospace and industrial machinery.
Armed with this strong experience, the company has built strong relationships with some of the most progressive automotive companies in the world. This has set up Tata Technologies in a relatively unique way. With the evolution in the electric vehicle sector, it is likely to witness strong tailwinds in the years ahead, making Tata Technologies a potential investment opportunity for long term investors.
https://www.livemint.com/market/stock-market-news/tata-technologies-the-next-tcs-11671767000167.html
