Tata Technologies Limited is a leading global engineering services company offering product development and digital solutions, including turnkey solutions, to global original equipment manufacturers ('OEMs') and their tier 1 suppliers. They have deep domain expertise in the automotive industry and leverage this expertise to serve the clients in adjacent industries, such as in aerospace and transportation and construction heavy machinery ('TCHM'). As a global organization, they bring together diverse teams from different parts of the world with multiple skill sets to collaborate in realtime and solve complex engineering problems for the clients. They primarily categorize the lines of business as follows: Services: The primary business line is services ('Services'), which includes providing outsourced engineering services and digital transformation services to global manufacturing clients helping them conceive, design, develop and deliver better products. The Services business contributed Rs 35,311.55 million and Rs 19,863.90 million to the revenue from operations in Fiscal 2023 and the six-months period ended September 30, 2023, respectively, comprising 80.00% and 78.62% of the revenue from operations for the respective periods. Technology Solutions: The Products and Education businesses is collectively, 'Technology Solutions'. Through the Products business they resell third-party software applications, primarily product lifecycle management ('PLM') software and solutions and provide value-added services such as consulting, implementation, systems integration and support. The Education business provides 'phygital' education solutions in manufacturing skills including upskilling and reskilling in relation to the latest engineering and manufacturing technologies to public sector institutions and private institutions and enterprises through curriculum development and competency center offerings through the proprietary iGetIT platform. In Fiscal 2023 and the six-months period ended September 30, 2023, the Technology Solutions business contributed Rs 8,830.22 million and Rs 5,403.12 million to the revenue from operations, respectively, comprising 20.00% and 21.38% of the revenue from operations for the respective periods. They are a pure-play manufacturing focused ER&D company, primarily focused on the automotive industry and they are currently engaged with seven out of the top 10 automotive ER&D spenders and five out of the 10 prominent new energy ER&D spenders in 2022. The automotive revenue attributable to the Services segment for Fiscal 2023 and the six-months period ended September 30, 2023 was Rs 31,314.66 million and Rs 17,457.56 million, respectively, comprising 88.68% and 87.89% of the revenue attributable to the Services segment for the respective periods. Additionally, the revenue attributable to the Services segment from verticals other than automotive for Fiscal 2023 and the six-months period ended September 30, 2023 was Rs 3,996.89 million and Rs 2,406.34 million, respectively, comprising 11.32% and 12.11% of the revenue attributable to the Services segment for the respective periods. Company has a diversified global presence across Asia Pacific, Europe and North America and partner with many of the largest manufacturing enterprises in the world. As of September 30, 2023, the clients are comprised of more than 35 traditional automotive OEMs and tier 1 suppliers and more than 12 new energy vehicle companies. The client portfolio includes the Anchor Clients, TML and JLR, leading traditional OEMs and tier 1 suppliers such as Airbus, McLaren, Honda, Ford, and Cooper Standard as well as new energy vehicle companies such as VinFast, among others such as Cabin Interiors and Engineering Solutions, ST Engineering Aerospace. Company has deep and long-lasting relationships with the clients. They actively engage on multiple projects with clients and have a high repeat rate of over 97.72%, 98.38%, 97.24% and 95.71% across the Services business for the six-months period ended September 30, 2023, Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively. As per financial performance, Tata Technologies Limited has posted total income / net profits of Rs 2,425.73 Cr / Rs 239.17 Cr (FY21), Rs. 3,578.38 Cr / Rs 436.99 (FY22), Rs 4,501.92 Cr / Rs 624.03 Cr (FY23) and Rs 2,587.42 Cr / Rs 351.90 Cr (upto H1 FY24). So as per previous financials data, company has shown good growth. Company has an average EPS of Rs 12.26 and average RoNW of 18.68% for last three fiscals. Issue is priced at a P/BV of 7.12 as per NAV of 70.27 as on 30.09.23. If we attribute latest earnings of FY22, FY23, TTM and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 46.42, 32.50, 28.29 and 28.82 respectively, which looks fairly priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, four lead managers are associated with this IPO, and have handled around 63 IPOs in last three fiscals. JM Financial Limited : This is 40th IPO from this BRLM. From last 10 IPOs, one opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, one is trading below issue price and remaining are trading above issue price or at par. (As on 17.11.2023) Citigroup Global Markets India Private Limited : This is 14th IPO from this BRLM. From last 10 IPOs, four opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, seven are trading below issue price and remaining are trading above issue price or at par. (As on 17.11.2023) BofA Securities India Limited : This is 12th IPO from this BRLM. From last 10 IPOs, three opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, seven are trading below issue price and remaining are trading above issue price or at par. (As on 17.11.2023) As per financials, Tata Technologies Limited has shown good growth, RoNW is 20.87% and P/E is respectively 46.42, 32.50, 28.29 and 28.82 as per FY22, FY23, TTM and annualised FY24 earnings. So, issue looks fairly priced, also its complete OFS. Company is in business of engineering services & technology solutions. Performance of BRLM is good. So, we give SUBSCRIBE rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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