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Tata Motor Share Price: Announcement of 9.9% Stake in Tata Technologies to TPG Ahead of IPO

by ARVIND KUMAR MISHRA
2 March 2024
in Blog
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Tata Motor Share Price: Announcement of 9.9% Stake in Tata Technologies to TPG Ahead of IPO

Tata Motor Share Price: Announcement of 9.9% Stake in Tata Technologies to TPG Ahead of IPO

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Tata Motor Share Price: Tata Motors, one of India’s most prominent automotive companies, made a groundbreaking announcement on Friday, October 13. Tata Motors announced its intention to sell off a 9.9 percent share in Tata Technologies Ltd., a strategic decision that might drastically alter the company’s destiny.

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This significant transaction, valued at Rs 1,613.7 crore, is set to be acquired by TPG Rise Climate, a private equity fund with a strong focus on climate-related investments. This move has brought the equity valuation of Tata Technologies to an impressive Rs 16,300 crore, equivalent to $2 billion.

Table of Contents

  • Tata Motor Share Price: Delving into the Deal
    • Tata Motor Share Price: The Major Players and Their Stakes
      • Tata Motor Share Price: Timeline and Financial Implications
        • Conclusion: Tata Motor Share Price A Transformative Move

Tata Motor Share Price: Delving into the Deal

Tata Motors Share Price: In a formal statement, The company has officially confirmed the sale of its 9.9 percent stake in Tata Technologies to TPG Rise Climate.With the usual closing processes in place, this transaction should be completed in the following two weeks.

It’s important to note that TPG Rise Climate has previously demonstrated its commitment to climate-focused investments by injecting $1 billion into Tata Passenger Electric Mobility Ltd. This latest venture solidifies their role as a strategic partner in Tata Motors’ pursuit of a market-shaping electric passenger mobility business in India.

Tata Motor Share Price: Delving into the Deal
Tata Motor Share Price: Delving into the Deal

Tata Technologies, the key player at the heart of this transaction, is a globally recognized engineering services company. They specialise in providing innovative product development and digital solutions to original equipment manufacturers (OEMs) worldwide. With deep domain expertise in the automotive sector, Tata Technologies extends its services to clients in related industries such as aerospace, transportation, and construction heavy machinery.

Tata Motor Share Price: The Major Players and Their Stakes

It’s critical to comprehend the key actors in the agreement as it develops. Currently, Tata Motors maintains a substantial 74.69 percent stake in Tata Technologies. Meanwhile, Alpha TC Holdings Pte holds a 7.26 percent stake, and Tata Capital Growth Fund I owns 3.63 percent of the firm. The sale of the 9.9 percent stake to TPG Rise Climate SF, along with an endowment trust linked to Tata Trusts Chairman Ratan Tata, marks a pivotal moment in the company’s history. TPG Rise Climate takes the lead as the primary investor in this transaction, contributing to the remarkable equity valuation of Rs 16,300 crore for Tata Technologies.

Tata Motor Share Price: Timeline and Financial Implications
Tata Motor Share Price: Timeline and Financial Implications

Tata Motor Share Price: Timeline and Financial Implications

The completion of this significant transaction is expected by October 27, 2023, unless mutually agreed upon extensions are necessary. Tata Motors will receive Rs 1,467 crore for the sale of their 9 percent stake to TPG Rise Climate, and an additional Rs 146.7 crore for selling a 0.9 percent stake to the Ratan Tata Endowment Foundation.Notably, Tata Technologies recorded an income from operations of Rs 4,414 crore and a net value of Rs 2,989 crore as of March 31, 2023.

Tata Technologies’ Upcoming IPO

Tata Technologies’ upcoming IPO is highly anticipated in the primary market. This marks the Tata Group’s first public issue since the iconic Tata Consultancy Services’ IPO in July 2004. The IPO structure includes an offer for sale of up to 95,708,984 equity shares, with Tata Motors planning to offload 81,133,706 equity shares, Up to 9,716,853 equity shares of the firm may be sold by Alpha TC Holdings, and up to 4,858,425 equity shares may be released by Tata Capital Growth Fund I.

Qualified institutional bidders are poised to reserve half of the net offer, amounting to 50% of shares. Non-institutional investors (NIIs) will be allowed to purchase a maximum of 15% of the shares, while individual investors will be able to purchase about 35% of the IPO.

The Financial Impact

Tata Motors’ decision to divest a 9.9% stake in Tata Technologies is part of a broader plan to reduce the company’s debt burden.

As of June 2023, Tata Motors’ net automotive debt stood at a substantial Rs 41,700 crore. Experts are bullish on the ramifications of this choice, foreseeing a huge drop in Tata Motors net obligation to around Rs 23,000 crore toward the finish of monetary year 2025.

Tata Motor Share Price: Timeline and Financial Implications
Tata Motor Share Price: Timeline and Financial Implications

TPG Rise Climate’s Role

The transaction is significantly influenced by TPG Rise Climate, which has previously invested in Tata Motors’ electric vehicle business. TPG Rise Climate is now set to acquire a substantial 9 percent stake in Tata Technologies, while the Ratan Tata Endowment Fund (RTEF) is set to purchase the remaining 0.9 percent. The anticipated completion date for this transaction is October 27, 2023, as confirmed in the stock exchange notification.

Tata Technologies’ Success Story

Tata Technologies has achieved substantial growth and success in recent times. Their revenues surged to Rs 4,418 crore, marking a remarkable 25 percent increase. Even more impressively, their profit after tax experienced a substantial 63 percent jump, reaching an impressive figure of Rs 708 crore. As the Tata Technologies IPO approaches, the company plans to offer 23.6 percent of its paid-up share capital to the market. This includes the participation of key stakeholders such as Tata Motors, Alpha TC Holdings, and Tata Capital Growth Fund I.

Conclusion: Tata Motor Share Price A Transformative Move
Conclusion: Tata Motor Share Price A Transformative Move

Conclusion: Tata Motor Share Price A Transformative Move

Tata Motors’ strategic decision to sell a 9.9 percent stake in Tata Technologies to TPG Rise Climate is undoubtedly a transformational move. This choice adjusts intimately with the organisation’s de-utilizing targets and prepares for a promising future. 

As the IPO of Tata Technologies draws near, investors, stakeholders, and industry observers are keeping a keen eye on these developments. Beyond the reduction of debt, this transaction underscores Tata Motors’ growing emphasis on electric mobility and climate-focused investments, firmly positioning them for success in a rapidly evolving automotive landscape.

Disclaimer: The information in this “Stock Profile” blog post is for informational purposes only. It is not financial advice. Always consult a qualified expert before making investment decisions.

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In a remarkable and unexpected turn of events, Tata Motors, one of India's leading automotive giants has made headlines with its impressive financial results for the second quarter of the fiscal year 2023. The company, which experienced a significant loss during the same quarter the previous year, has staged a remarkable comeback, posting a net profit of ₹3,764 crore. Many reasons have been given credit for this financial turnaround, such as increased domestic market volumes, favourable shifts in commodity prices, the success of its luxury car division, Jaguar Land Rover (JLR), and enhanced operational effectiveness. This article examines Tata Motors Q2 2023 results in detail and the driving forces behind the company's return to profitability. Revving Up Revenue: Tata Motors Q2 Results Tata Motors has reported stellar performance in its Q2FY24 financial results. The company's revenue for the quarter under review witnessed a phenomenal 32% surge, reaching ₹1.05 lakh crore. The revenue growth observed is quite notable in comparison to the ₹79,611.4 crore that was generated in the same quarter of the previous year. A significant rise in revenue like this suggests not only a recovery but also the company's flexibility in responding to changing market conditions. What Drove Tata Motors into Profit Territory? The impressive quarterly profit was driven by a combination of factors. Let's dissect these key drivers of Tata Motors' success in Q2FY24: Domestic Market Resurgence: The resurgence of the domestic automotive market in India played a pivotal role in Tata Motors' turnaround. The pick-up in volumes and demand for vehicles in the domestic market contributed significantly to the company's improved financial performance. Softening Commodity Prices: The softening of commodity prices has been a blessing for Tata Motors. As raw material costs decreased, the company experienced cost savings and improved profit margins. Jaguar Land Rover's Contribution: Tata Motors luxury car subsidiary, Jaguar Land Rover (JLR), demonstrated a strong performance, posting a 30.4% increase in revenue year-on-year. This growth was driven by increased wholesales, an improved product mix, cost reduction initiatives, and investments in demand generation. Operational Efficiency: Tata Motors enhanced operational efficiency, reflected in its EBITDA for the quarter, which soared by a remarkable 86%, reaching ₹14,400 crore. The company's operating margin also improved significantly, surging by 400 basis points to 13.7% in Q2FY24, compared to 7.8% in the same period the previous year. This increase in operational efficiency can be attributed to lower raw material costs and the benefits of operational leverage. JLR's Roaring Performance on Tata Motors Q2 Results Jaguar Land Rover, the luxury car subsidiary of Tata Motors, has been a major contributor to the company's stellar performance. JLR's revenue in the second quarter of FY24 reached £6.9 billion, marking a 30.4% increase year-on-year. This growth was driven by increased wholesales, an improved product mix, cost reduction efforts, and investments in demand generation. JLR's sales, excluding its China joint venture, saw an impressive 29% increase, reaching 96,817 units. This achievement was largely credited to a continuous improvement in the supply of specialised semiconductors, which facilitated increased production and sales. A Strong Outlook for Tata Motors Q2 Results Tata Motors is not resting on its laurels and remains optimistic about its future prospects despite potential external challenges. The company hopes to perform better in the second half of the fiscal year and expects a moderate inflationary environment. Over the next few months, a number of factors are anticipated to propel growth: A healthy order book at JLR. Robust demand for heavy trucks in the commercial vehicle sector. The introduction of new-generation products in the passenger vehicle segment. The management team of the company is positive that these elements, combined with an emphasis on creativity and expense reduction, will assist Tata Motors in maintaining its forward movement and achieving ongoing triumph in the fiercely competitive automotive sector. Tata Motors Domestic Success and Initiatives Tata Motors has not only focused on sales but also on innovation and expansion. The company marked a significant milestone by supplying 1000 e-buses nationwide, contributing to India's quest for fully decarbonized long-distance and urban mobility. Furthermore, Tata Motors delivered a hydrogen cell-powered bus to Indian Oil, marking a significant step toward a more sustainable and eco-friendly transportation system. 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In conclusion, Tata Motors Q2FY24 results underscore the company's commitment to innovation, sustainability, and a better future in addition to showcasing its amazing comeback from a trying time. Tata Motors is a prime example of how creativity and adaptability can result in success in the ever-changing automotive landscape at a time when the industry is facing many difficulties and changes. Tata Motors is ready for the exciting journey ahead in the automotive industry with a positive outlook and a commitment to customer satisfaction.

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