Incorporated in 1989, Tata Technologies is a leading global engineering services and digital services company that specialises in providing innovative solutions to the automotive, aerospace, and industrial sectors.
Tata Technologies is a subsidiary of Tata Motors. This is an IPO from a Tata group company after a span of 19 years, following the successful Tata Consultancy Services (TCS) IPO in June 2004. The Pune based company specialises in providing outsourced engineering services and driving digital transformations for clients worldwide. They have a workforce of over 11,000 employees spread across 18 global delivery canters.
The company’s core focus lies in assisting companies throughout the entire product development process, from conception and design to development and delivery, ultimately enabling the creation of superior products. Tata Motors and Jaguar Land Rover (JLR) are among the top five clients for Tata Technologies. It also counts VinFast, a southeast Asian EV OEM, among its most important clients.
The company saw a CAGR rise of over 22% in its revenue from operations and over 37% in its profit between FY21 and FY23. Moreover, the global engineering, research and development (ER&D) spend is expected to reach $2.67 trillion by 2026 from $1.81 trillion as of 2022. Out of these, ER&D spend outsourced to third-party service providers is anticipated to grow at a CAGR of 11-13% between 2022 and 2026. All this could be beneficial for the company.
This company is now launching the Tata Technologies Ltd IPO. The Tata Technologies IPO will be a complete offer for sale where existing shareholders and promoters will offload over six crore shares. Meanwhile, the company shares will be listed on NSE and BSE.
- Incorporated in 1989, Tata Technologies is a leading global engineering services and digital services company.
- The company’s core focus lies in assisting companies throughout the entire product development process, from conception and design to development and delivery.
- The company saw a CAGR rise of over 22% in its revenue from operations and over 37% in its profit between FY21 and FY23.
- The global engineering, research and development (ER&D) spend is expected to reach $2.67 trillion by 2026. Out of these, ER&D spend outsourced to third-party service providers to grow at a CAGR of 11-13% between 2022 and 2026.
Strengths and opportunities
- Has deep domain knowledge and expertise in the automotive industry.
- Between 9MFY21 to 9MFY22, the company’s EBITDA margin increased from 18.6% to 19.2%.
- In 9MFY22, 98% of the company’s revenue to the services segment came from repeat clients.
- Offers end-to-end solutions for original equipment manufacturers (OEM) in developing competitive EVs, including concept design, engineering, and after-sales services.
- Has a proprietary e-learning platform that helps them leverage their manufacturing domain knowledge, allowing them to tap into large upskilling and reskilling markets.
- Has a geographically diversified customer base across Asia Pacific, Europe and North America. For the first nine months of last year, 76% revenue came from foreign currencies.
Risks and threats
- Relies heavily on automotive clients, which accounted for 88.4% of its revenue in 9MFY22, making it vulnerable to economic downturns or segment-related factors.
- Faces revenue risk if its top five clients experience business decline or cessation. They contributed to 72.7% of its 9MFY22 revenue.
- Unauthorised access, security breaches, computer hacks, viruses, and disruptions pose threat to the company’s data centres and networks.
- Intense competition in the engineering services industry could affect the company’s pricing and have an adverse effect on their business, financial condition and results of operations.
You can now apply for the Tata Technologies IPO on Upstox. Click here.