Things to know about TATA TECH IPO

Tata Technologies financials look really good, the company has zero debt Revenues are growing and Profits are growing. Margins are improving and they’re tending to clients in the EV segment – a segment that will explode in the next few years. Clearly this is an extremely promising company whose IPO should be red hot right? Well, not quite. There are 3 major things to consider

The Issue of Competition

The Electric Vehicle Segment is highly competitive and there will be a whole host of companies just like Tata Technologies competing for this pie. So it’s not easy to constantly keep bagging new projects, just because EV is exploding. In fact, here’s the funny thing — In the DHP, Tata Technologies lists out 4 key competitors, 2 of which are Tata Owned Companies -TCS and Tata Elxsi!

The Dependency Risk

The top 5 clients contribute nearly 72% of their revenue. The top 2 clients i.e. Tata Motors and Jaguar Land Rover alone contribute 40% to their revenue. And if one of these top clients has an issue with Tata Technologies then all of a sudden you’re looking at a massive hit in their revenues.

The Attrition Numbers

After 2021, attrition rates (the percentage of employees leaving) jumped from 11% to 25%. It seems employees don’t want to stick and while that hasn’t had a major impact on the company’s financials yet. It could become a problem if the trend persists. So yeah there are definitely issues. But despite all this, Tata Technologies is one of the few companies that could really participate in the global EV growth story. It’s a tipping point and if things continue the way they are going right now, Tata Technologies could be very popular so long as they price the IPO conservatively.

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *