Tata Technologies IPO: A brief overview of the Pune-based ER&D firm

Founded as a brainchild of former Tata Sons Chairman Ratan Naval Tata around three decades ago, engineering services company Tata Technologies is set to hit bourses with a strong client portfolio and niche offerings in automotive and aerospace verticals.

Headquartered in Pune, Tata Technologies offers engineering, research & development (R&D), digital transformation, and educational services throughout the product lifecycle of shared services, components, subsystems, and software-defined vehicles. The company has 19 global delivery centres across 27 countries with a workforce of over 12,000 people.

The company was envisioned by Ratan Tata, who saw an opportunity in the evolving product engineering and manufacturing IT space. Since 1989, Tata Technologies’ professionals have been contributing to engineering and design services to the world’s leading manufacturers. It was incorporated in 1994, as an in-house product development unit of Tata Motors.

According to the draft documents filed with the Securities and Exchange Board of India (SEBI), the company now has a diversified portfolio of clients, including some of the largest manufacturing enterprises across Asia-Pacific, Europe, and North America in the world. As of December 31, 2022, its clients included more than 35 traditional automotive OEMs and tier-1 suppliers as well as over 12 new energy vehicle companies.

Apart from its anchor clients Tata Motors and Jaguar Land Rover, the company served other global biggies such as Airbus, Ford, McLaren, Honda, and Cooper Standard.

In FY 2022-23, the consolidated revenue from operations of Tata Technologies stood at Rs 4,414.18 crore, up 25.1 per cent from Rs 3,529.57 crore in 2021-22 despite macroeconomic headwinds. Revenue from the sale of services grew 33.2 per cent to Rs 3,535.22 crore during the year. Profit after Tax (PAT) increased by 42.8 per cent to Rs 624.03 crore against Rs 436.97 crore in FY 2021-22.

Outsourced engineering services and digital transformation services made up around 75.12 per cent of the revenue from operations of the company in fiscal 2022. Products and Education businesses, which the company terms as technology solutions, comprised 24.88 per cent of the total revenues. The company had a repeat rate of over 97.24 per cent across its services businesses in Fiscal 2022.

As the core business area of the company, manufacturing majors outsource Tata Technologies R&D (research and development) workloads. The company’s key accounts are comprised of 11 of the top 20 global automotive ER&D spenders and four out of the 10 prominent new energy ER&D spenders globally.

“If we look now at the overall market that we are a part of, the global ER&D market today is almost $2 trillion. And the addressable space for engine space is growing at a faster rate than the overall market. And the contribution from India is growing at a faster rate than the addressable market. Because of the demographic advantage that India has, because of India's ability to deliver services to the global market at scale, we firmly believe that India in the future will be the innovation hub, the engineering platform for the global manufacturing sector,” said Warren Kevin Harris, the Chief Executive Officer and Managing Director of Tata Technologies. Harris has been leading the company since 2014.