Tata's $1B Stock Offering Makes It A Tough Competitor - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IT Leadership // IT Strategy

Tata's $1B Stock Offering Makes It A Tough Competitor

Tata Consultancy Services' public stock sale, which began last week, will give it a major infusion of cash that could make the fast-growing Indian firm an even-tougher competitor. The 28,000-employee outsourcer, which counts General Electric Co. and General Motors Corp. among its customers, launched a one-week public offering period on India's National Stock Exchange and Mumbai Stock Exchange, floating up to 13% of the company's shares at a price range of between $16.28 and $18.90.

At the low end of that price range, it would raise just over $1 billion and value the company around $7.8 billion.

TCS hopes to follow in the footsteps of rivals Wipro Technologies and Infosys Technologies Ltd., two Indian IT service providers that have used public offerings to fund rapid expansion. TCS already has passed $1 billion in annual revenue--as have Infosys and Wipro--and an injection of capital could make it even more formidable on the international IT-services scene. "If TCS uses its new capital to become more aggressive, it could shake up the global IT sourcing market," Gartner analyst Partha Iyengar says in a recent report.

The offering could help TCS compete more effectively in India's tightening labor market, where employee poaching among competitors is rampant. TCS is reserving 10% of the shares issued for its employees at market rates in India. Tata Group chairman Ratan Tata said in a statement that TCS will use some of the proceeds to make acquisitions abroad. The company has offices in 32 countries.

The Indian stock market is so friendly to tech firms these days that it has some U.S.-based companies with significant business there considering listing on the country's stock exchanges. Sierra Atlantic Inc., headquartered in Fremont, Calif., provides outsourced software development and is mulling a public offering in India. "It's a much more favorable environment," says Marc Hebert, executive VP. Sierra maintains a development center in the Indian city of Hyderabad. Hebert says any offering would be at least 18 months away.

"Right now, valuations are much higher in India because the interest in technology is higher," says Manu Bammi, CEO of SmartAnalyst Inc., which provides financial research from its offices in India. He notes that the Securities and Exchange Board of India has recently adopted a number of reforms that put Indian markets more on par with U.S. exchanges in terms of transparency and accountability.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
InformationWeek Is Getting an Upgrade!

Find out more about our plans to improve the look, functionality, and performance of the InformationWeek site in the coming months.

Remote Work Tops SF, NYC for Most High-Paying Job Openings
Jessica Davis, Senior Editor, Enterprise Apps,  7/20/2021
Blockchain Gets Real Across Industries
Lisa Morgan, Freelance Writer,  7/22/2021
Seeking a Competitive Edge vs. Chasing Savings in the Cloud
Joao-Pierre S. Ruth, Senior Writer,  7/19/2021
White Papers
Register for InformationWeek Newsletters
Current Issue
Monitoring Critical Cloud Workloads Report
In this report, our experts will discuss how to advance your ability to monitor critical workloads as they move about the various cloud platforms in your company.
Flash Poll