Tata Technologies IPO: Check out 10 key risk factors from RHP before investing

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₹3,042.51 crore from the IPO which is entirely an offer for sale (OFS) of 6.09 crore equity shares by the promoter and investors. Promoter Tata Motors will offload 4.62 crore equity shares worth ₹2,313.75 crore in the OFS, while investors Alpha TC Holdings Pte Ltd will sell 97.17 lakh shares and Tata Capital Growth Fund I will offload 48.58 lakh shares in the Tata Technologies IPO. Also Read: Tata Tech IPO fully subscribed in less than an hour of opening; retail section gets full subscription Tata Technologies IPO price band has been set at ₹475 to ₹500 per share.

JM Financial, Citigroup Global Markets India and BofA Securities India are the book running lead managers of the Tata Technologies IPO, while Link Intime India is the IPO registrar, as per the Red Herring Prospectus (RHP). Tata Technologies, a subsidiary of automobile major Tata Motors, is a pure-play manufacturing focused Engineering Research & Development (ER&D) company, primarily focused on the automotive industry and 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. Tata Technologies operates in two primary segments, Services and Technology solutions.

Services is its core focus area constituting 80% of its revenue in FY23. Over FY23, the company’s revenue clocked a 30% CAGR, leading to a 46% EBITDA CAGR, translating to a 61.5% PAT CAGR. The company’s net profit during H1FY24 was ₹351.90 crore upon a revenue of ₹2,587.42 crore.

Tata Technologies faces a key risk of high competition. The company operates in a global and fragmented market, competing with a variety of companies. Its key competitors in the ER&D service market include pure play Indian ER&D service providers such