5 Upcoming IPOs of Tata Group

Over the past year, several companies within the Tata Group have delivered remarkable returns, propelling the conglomerate's market value to an impressive US$ 365 bn or Rs 30.3 trillion (tn).

Thes remarkable returns have been fueled by the success of companies such as Tata Motors and Trent, along with robust performances from Titan, TCS, and Tata Power.

While current Tata stocks might seem expensive for some investors, exciting news awaits. The group plans to list five new companies through Initial Public Offerings (IPOs) in 2024.

These IPOs span diverse industries, offering early access to the Tata powerhouse for those wanting in.

#1 Tata Sons.

First on the list is Tata Sons.

Tata Sons is the investment holding company of the Tata Group.

The Tata Group comprises over 100 operating companies in seven business sectors: communications and information technology (IT), engineering, materials, services, energy, consumer products and chemicals.

The company has been classified as an upper-layer non-banking financial company (NBFC), supporting and promoting other Tata Group businesses. It is currently preparing for its initial public offering (IPO).

According to the Reserve Bank of India's rules, when a company is designated as an upper-layer NBFC, it must go public within three years.

On 14 September 2023, the RBI announced that 15 financial firms, including Tata Sons, fall into this upper-layer NBFC category.

According to projections, Tata Sons is set to enter the public market by September 2025.

Size and the total IPO size is still speculation and not confirmed but reports state it might be the biggest IPO in Indian history.

That's right, Tata Sons IPO might actually surpass LIC's IPO size.

#2 BigBasket

Next on the list is Bigbasket.

Bigbasket is an Indian online grocer headquartered in Bangalore, India and currently owned by Tata Digital. It was the first online grocer in India, set up in 2011. It is a registered company with the name of the Supermarket Grocery Supplies.

The company's platform provides an easy relaxed way of browsing and shopping for groceries.

BigBasket is contemplating an IPO in 2025, with the decision contingent on its profitability trajectory. The funds generated from the IPO will be allocated to fortify its quick commerce division and extend its nationwide reach to solidify its market dominance.

The company plans to augment the number of dark stores supporting BB Now, its quick commerce format that pledges deliveries of essential household items within a 30-minute timeframe.

With a target to achieve profitability within six to nine months, BigBasket's slotted grocery delivery business is currently in the black, while its daily business (BB Daily) is nearing profitability.

The quick commerce segment (BB Now) is presently unprofitable but is anticipated to become profitable within the specified time frame.

Recognizing the challenges of scaling in the low-order value quick commerce business, BigBasket is exploring the expansion of its offline presence.

#3 Tata Advanced Systems

Third on the list is Tata Advanced Systems.

Incorporated in 2007, Tata Advanced Systems (TASL) is a wholly-owned subsidiary of Tata Sons, which focuses on aerospace and defence manufacturing, including military vehicles, radars, missiles, and unmanned aerial vehicles.

Initially, Tata Motors-owned TASL as part of its defence business but later divested the defence business, and TASL is now directly owned by Tata Sons.

Tata Advanced Systems has a strong portfolio of partnerships and joint ventures with leading global aerospace and defence firms, making it an integral partner in the international supply chain and in some instances, a global single-source provider for leading defence OEMs.

Teaming up with giants like Airbus, TASL strengthens India's defence muscle by building new weapons and expanding the supply chain. They're even partnering with space tech leader Satellogic to build India's homegrown space tech.

Further, in the latest move, on 19 February 2024, Air India and Tata Advanced Systems, on Monday, signed an MoU with the Karnataka government, proposing an investment of Rs 23 bn on various projects with the potential to create 1,650 jobs.

Tata Advanced Systems has planned three projects with an investment of Rs 10.3 bn. These include a passenger-to-freighter aircraft conversion facility (Rs 4.2 bn), a gun manufacturing facility (Rs 3.1 bn) and aerospace and defence research and development (Rs 3 bn). These are expected to add 450 jobs.

Tata Advanced Systems has planned to source more than half of its 13,000 parts for its gun manufacturing facility from within Karnataka.

#4 Tata Play

Fourth on the list is Tata Play.

Tata Play is a leading player in the DTH business. The company was earlier known as Tata Sky.

It also aggregates streaming platforms via Tata Play Binge, which houses around 17 over-the-top (OTT) platforms and has a broadband service called Tata Play Broadband.

The Tata Play IPO has garnered a lot of interest from investors as it is the first company in the country to use the confidential pre-filing of documents option for its initial public offer (IPO) with the market regulator.

Tata Sons owns 41.5% of Tata Play, while Disney owns a 30% stake in the company - 20% directly and 9.8% indirectly through the acquisition of TPCF Corporation. India is the only country in which Disney has an interest in a distribution platform.

The company is seen as strategically important and adds value to the group's digital growth plans.

Tata Play has a leading market share of 33.2% in the DTH market.

In FY23, Tata Play reported a net loss of Rs 1.1 bn compared to a net profit of Rs 686 million (m) in FY22. The company swung to a loss as a result of a 5.1% decline in revenue from operations to INR 44.9 bn in FY 2023.

Tata Play IPO aims to mobilize around Rs 20-25 bn by way of a sale of shares by existing investors, including Singapore's Temasek Holdings, Tata Opportunities Fund, and Walt Disney.

These investors collectively hold a 37.8% equity stake in Tata Play.

The company received approval from the SEBI board in May 2023 and was planning to launch the IPO last year.

However, the public offer got delayed, and the management is now targeting a stock market listing this year. The IPO dates are yet to be announced.

#5 Tata AutoComp Systems

Last on the list is Tata AutoComp Systems.

TACO serves as the vehicle for the Tata Group's ventures in the auto components sector. Tata AutoComp Systems is wholly owned by Tata Group entities, with Tata Sons holding approximately 21% and the remaining stake held by Tata Industries.

TACO serves as the vehicle for the Tata Group's ventures in the auto components sector. Tata AutoComp Systems is wholly owned by Tata Group entities, with Tata Sons holding approximately 21% and the remaining stake held by Tata Industries.

In 2023, Tata Autocomp Systems' revenue shot up by 56.5% to Rs 111.7 bn from Rs 71.3 bn in 2022. Similarly, profits rose from Rs 4.7 bn in 2022 to Rs 7.8 bn in 2023.

This is the company's latest attempt to tap primary markets after a failed attempt several years back in 2011 when TACO IPO had to be withdrawn in light of unfavourable market conditions. Nevertheless, market conditions are favourable this time, and the company's strong financial performance, coupled with Tata's brand name, is likely to pull investors to the TACO IPO.

Looking ahead, the company is exploring partnerships with battery manufacturers and charging infrastructure providers.

To know more details, check out Tata AutoComp Systems is Set to Become a Key Battery Energy Storage Player.

Conclusion

The Tata Group boasts a strong track record of success across various sectors, suggesting potential for future growth. Participating in an IPO could offer early access to this potential, especially if the company being offered has promising prospects.

The Tata name carries a strong reputation for ethics, innovation, and long-term vision. This strong brand image adds an element of trust and stability to your investment.

Looking back at its most recent IPO, launched after nineteen in November 2023, Tata Technologies made a spectacular debut at a staggering 168% surge on its listing day.

This remarkable feat marked the most impressive listing since November 2021 for an IPO exceeding Rs 5 billion (bn).

Although the Tata Group companies have always remained at the forefront of innovation and the India growth story, it does not mean Tata stocks aren't vulnerable to macroeconomic conditions.

You should treat them like any other company when considering them from an investment perspective.

Remember, a fundamentally strong company has the potential to give good returns in the long run. Hence, it is better to carry out proper due diligence before investing in any stocks, including Tata Group companies.

As you're interested in Tata group stocks, check out the new section in our Stock Screener, where you can view the fundamentals of companies within a business group in one screen, including the Top Tata group stocks.

For more information on IPOs, check out the list of upcoming IPO's.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...