TCS launches road show for India's largest IPO

Thursday, 22 July 2004, 07:00 Hrs
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MUMBAI: Tata Consultancy Services, India's biggest software maker, Wednesday launched a road show for the company's mega initial public offering (IPO), the largest in the history of the domestic capital market.

The issue will open July 29 and close Aug 5. TCS has fixed its price band for the bidding between 775 ($16.8) and 900 ($19.5) a share, S. Ramadorai, chief executive officer of TCS told a news conference here.

TCS could raise a whopping $1.2 billion from the sale of over 13 percent stake in Asia's largest software services company, making it the largest public offering to hit the Indian markets.

Ramadorai said the issue would consist of a fresh issue of shares and "an offer for sale" by existing shareholders. The sale of 63.75 million shares amounts to 13.33 percent of the expanded equity.

The company has reserved 5.5 million shares for employees of TCS Ltd., TCS divisions and Tata Sons.

Ramadorai said TCS's April-June quarterly sales posted a growth of 40 percent to 21.34 billion ($463 million) and net profit grew by 71 percent to 5.19 billion ($112 million).

Analysts say buoyed by the upcoming share sale of TCS, a host of Indian companies were expected to rekindle investor appetite in a sagging stock market.

Companies, especially software makers, which were postponing their public offering plans in recent years due to depressed market conditions, might revive the process on TCS' decision, they say.

In the April-January period of the current fiscal, only 16 public issues were launched in the market that raised a meagre 25.15 billion ($555.67 million), said New Delhi-based market research firm Prime Database.

TCS is a division of Tata Sons, the holding company of the $13-billion Tata Group that has a presence in a wide spectrum of industrial sectors including automobile, steel and telecommunications.

It has become hugely profitable and carved out a niche for itself in the competitive global technology market after it started out by writing software code for its parent company in 1968.

Analysts said TCS's public listing would not only come as a major boost to the country's IT industry but also help the company achieve global visibility in the years ahead.

"The IPO will provide an opportunity for Tata Sons and its shareholders to realise the value of their holdings through sale of their shares after TCS gets listed," said an analyst with a domestic brokerage firm.

TCS became India's first billion-dollar software firm in revenues last year. Its revenues for the fiscal ended March 31, 2003, touched 50.12 billion ($1.04 billion), up from 41.87 billion ($908 million) in fiscal 2001-02.

The company manages projects for over 1,000 clients in more than 55 countries and employs nearly 28,000 software professionals across the globe.

Source: IANS
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