Tata Projects Eyes IPO In Next 12-18 Months, Likely To Generate 5% Cash On Revenue: CEO Vinayak Pai

Tata Projects, the engineering, procurement, and construction (EPC) arm of the Tata Group, is gearing up for a potential stock market listing within the next 12-18 months. The company plans to strengthen its financial position and achieve consistent cash generation as part of its listing preparation.

"The aim is to become 'fit' during this period (12-18 months) by generating 4-5% cash on our revenue-a key metric of financial fitness," said Vinayak Pai, Managing Director and CEO of Tata Projects, in an interview with The Economic Times. Pai emphasized that while there is no fixed target linked to the listing, achieving robust cash generation would enhance the company's readiness. However, the final decision will rest with shareholders.

Tata Projects has been a pivotal player in delivering high-profile projects, including the New Parliament Building in New Delhi and Atul Setu in Mumbai. Over 20% of its projects now originate from Tata Group companies, such as Tata Consultancy Services (TCS), Tata Power, Indian Hotels, Tata Steel, and Tata Electronics.

This proportion has increased from around 8% two years ago, fueled by the Tata Group's growing investments in sectors such as IT campuses, hospitality, and infrastructure. Pai highlighted that Tata Projects has evolved its skill set and capacity to handle complex assignments, making it a preferred partner within the conglomerate.

Looking ahead, Tata Projects aims to diversify its operations by focusing on high-growth sectors like semiconductors, green energy, solar power, data centres, and green fuels. These areas align with global trends and are expected to drive the company's future orderbook growth.

As of June 2024, Tata Projects reported an orderbook worth Rs 44,000 crore, with approximately 90% of the orders stemming from India. The company has strategically shifted from a planning and rebuilding phase to a more aggressive approach to securing new orders, according to Pai.

Financial Performance
Tata Projects has demonstrated a turnaround in its financial performance. For the fiscal year ending March 31, 2024, the company recorded a consolidated gross income of Rs 17,761 crore and a net profit of Rs 81.97 crore, driven by robust order execution and reduced provisioning. This marked a sharp recovery from the Rs 855.65 crore loss reported in the previous fiscal year.

The company's shareholding is predominantly controlled by Tata Sons, which owns 57.31% as of March 2024. Other major stakeholders include Tata Power (30.81%), Tata Chemicals (6.16%), Voltas (4.30%), and Tata Industries (1.42%).

While public sector projects have historically dominated Tata Projects' portfolio, the company is now witnessing an increase in orders from private entities. Pai anticipates that the revenue mix will shift to 70% private and 30% public sector within the next five years.

If Tata Projects proceeds with its listing, it will follow the successful IPO of Tata Technologies in late 2023, which marked the first public offering by the Tata Group in 19 years since TCS went public in 2004.

*Inputs from The Economic Times*