Phillip Capital - Tata Technologies IPO Note

22 November 2023

Tata Tech’s IPO is coming in at a PE of 25/21x FY25/26 on our estimates, lower than Indian ER&D service providers that trade at 41x/ 35x median PE. We believe Tata Tech can be a beneficiary of strong momentum in Auto & Aero ER&D spending in the near to medium term. We recommend subscribing to the IPO. Risks include (1) a Slowdown in any of the top 10 clients, (2) heightened competitive intensity, and (3) margin pressure due to higher SG&A spending.