Tata Projects Eyes IPO Plans, Focuses on Sustained Profitability: MD

Tata Projects has initiated internal discussions about a potential future initial public offering (IPO) following a successful turnaround in the 2023-24 fiscal year. However, the company intends to ensure sustained profitability and scale before finalizing any plans, according to managing director and CEO Vinayak Pai in an interview with Moneycontrol.

Tata Group's IPOs are highly anticipated by investors, with the last significant IPO from Tata Technologies making waves in 2023. This was notably the first IPO from the conglomerate in over 19 years.

"We have been discussing the possibility of an IPO. However, our financial performance must remain steady and robust for several years before we can seriously consider it," Pai stated.

The construction and engineering sectors were severely impacted by Covid-related disruptions, causing project delays and labor migration. "We experienced delays in executing some public sector projects, leading to liquidity issues due to milestone payment structures," Pai explained.

After recording a profit of ₹10,365.15 lakhs in 2020-21, Tata Projects faced losses in the following two fiscal years, FY22 and FY23. However, the company returned to profitability in 2023-24, reporting a net profit of ₹14,548.04 lakhs.

Pai expressed optimism that these challenges are now behind them. The company has reported profits for the past five quarters and improved its operating margins. "We now have a strong portfolio of private sector orders, allowing us to negotiate contracts with an equitable risk-reward mechanism," Pai said. He added, "Balancing both public and private sector projects has provided stability, reducing reliance on milestone payments."

Reports suggest that the Tata Group is preparing IPOs for companies like Tata Capital, Tata Autocomp Systems, Tata Passenger Electric Mobility, BigBasket, Tata Digital, Tata Electronics, Tata Housing, and Tata Batteries over the next 2-3 years. These public listings by promoter firm Tata Sons aim to unlock value, drive growth, and offer exit options for select investors. While Pai did not provide a timeline for Tata Projects' potential IPO, he indicated that preparatory work has begun.

In the final quarter of 2022, the conglomerate announced plans to invest $90 billion in emerging industries by 2027, including mobile components, semiconductors, electric vehicles, batteries, renewable energy, and e-commerce. The Tata Group has since revised this target, projecting investments to exceed $120 billion in the coming years.

Additionally, earlier reports suggested that Tata Sons might be listed on the exchanges by September 2025 to comply with a Reserve Bank of India (RBI) notification. However, subsequent reports indicated that this timeline might be improbable as the group explores other options to meet regulatory requirements.