Tata Play to Finally Launch an IPO. 5 Key Details

Have you ever been in a roller coaster?

Roller coaster rides are unpredictable. One moment the cart carries you up making you hold your breath.

In the very next moment, the cart is pushed down. You will be wondering whether you will survive the fall. Before you start to think, you have hit the bottom and the cart starts going up again.

Its movement is quite similar to the movement of share market in 2022. The share markets indeed took investors on a roller coaster ride this year.

Following the unpredictability of stock market, Indian IPO markets were also dead. Companies that had there IPOs approved from the regulators chose not to go public in times of uncertainty.

However, since Syrma and DreamFolks Services are out with their IPOs, more companies are looking to go public again.

One of these companies is Tata Play.

Read on to know more about Tata Play and the Tata group company's plan to enter into the public listing.

About Tata Play

Incorporated in 2001 and initiating services in the year 2006, Tata Play is one of India's leading content distribution platforms providing Pay TV and OTT services.

Tata Play was one of the first Direct to Home (DTH) operators to launch customized channel packs.

Tata Play, formerly known as Tata Sky, is a joint venture between Tata Sons and TFCF Corporation (which is owned by Disney) and is India's leading content distribution platform.

Let us know why Tata Sky rebranded itself to Tata Play.

From Tata Sky to Tata Play

Most of us remembered Tata Sky with its famous jingle 'Tata Sky - isko laga dala to life jinga la la'.

However, at the beginning of 2022, we saw ads featuring Saif Ali Khan and Kareena Kapoor Khan saying Tata Sky is now Tata Play. The company's jingle is the same but the company's name has changed.

On 26 January 2022, Tata Sky rebranded to Tata Play.

Tata Sky already had a good standing in the direct-to-home (DTH) business. However, it has expanded its business to include even OTT services in its business.

Hence the company felt the need to change its name. Its past was identified as the company providing DTH services only. Hence, to give an identity to its news business, Tata Sky changed to Tata Play.

Tata Play to come out with an IPO soon

Tata Group has a set of loyal investors, who believe investing in the group stocks is always good. These investors were overjoyed on Saturday last week.

On Saturday, leading newspaper, Mint, said that Tata Play is likely to file the draft prospectus for its initial public offering by the end of this month.

The newspaper further said that the size of the offer will likely range between US$300-400 m, at least. The source of the information is however unknown.

Tata Play was looking to go public for some time now. Mint reported in August 2021, that the company is planning to issue an IPO.

However, the rebranding plan in January 2022 and the gradual death of IPOs in the stock market, pushed the company away from issuing any offer.

The source informed had further informed mint that the work on the draft red herring prospectus (DRHP) has already started at the beginning of the year and that it may be filed with the regulator by the end of the month.

According to a report, Tata Play has already appointed Kotak Mahindra Bank as the lead banker and Cyril Amarchand Mangaldas (CAM), one of India's largest corporate law firms, to advise on the IPO and subsequent listing.

Disney owns 30% stake in Tata Play - 20% directly and 9.8% indirectly through acquisition of TPCF Corporation. India is the only country in which Disney has an interest in a distribution platform.

However, Disney maybe considering to off load 10% shares in Tata Play.

Tata Play is a leading player in the DTH business. It owns the highest stake of 33.2% in the market. Hence it has a very good position in the market, but has the position turned into positive financial results?

Let's take a look.

Tata Play's financial performance

The financial year 2018-19 and 2019-20, will be written in red in the history of financial performances of companies.

Tata Play is no exception to that. In the above mentioned years, Tata Play was deep into losses.

However, in the next two years, Tata Play slowly recovered, but has not yet reached the pre-Covid-19 profit levels.

The total income of Tata Play was Rs 474.4 bn in the financial year 2021-22. This is 1% higher compared to previous year.

The total net profit for the financial year 2021-22 was Rs 686 m in the financial year 2021-22. It is almost same to last year's profit.

Even the net profit margin in the two years have remained the same.

The company has a negative net worth and a negative debt-equity ratio. Hence Tata Play has more liabilities than assets.

In the past five years, its debt levels have almost remained the same.

Financial Snapshot

Particulars (Rs in m)	FY17	FY18	FY19	FY20	FY21
Total Income	53,318	56,721	61,423	47,227	47,048
Growth	19%	6%	8%	-23%	0%
Operating profit	13,909	16,350	19,400	21,880	22,150
Operating profit margin	26%	29%	32%	46%	47%
Net profit	-168	645	3637	-2341	688
Net profit margin	0%	1%	6%	-5%	1%

Source: Equitymaster

Investment Takeaway

It appears like Tata Play is taking the advantage of the changing winds in the IPO markets.

Syrma Technologies, and DreamFolks Services, both these IPOs saw a good response from the markets.

This week, another IPO opened for subscription. Tamilnad Mercantile Bank's IPO received a good response today.

Hence, it seems like the Indian IPO markets are finally reviving.

Tata Play was looking to go public and now it seems to be a perfect time. In fact, Tata Play isn't the only Tata company to public in this financial year.

Reportedly, Tata Technologies - an arm of Tata Motors is also planning to go public this year.

Hence for investors that look out for every move of Tata Group, this news may surely be a big one.

If Tata Play comes out with an IPO by the end of this month, this is will be the first IPO by Tata Group after 18 years. The last IPO was of TCS in 2004.

Hence, a blue chip conglomerate coming out with an IPO may be a much-needed boost for the Indian IPO markets.

However, it must be noted that the financials of the company paint a bad picture. At a time when loss-making companies like Zomato and Paytm have paraded the party of IPO lovers, will Tata Play be able to survive?

Only time will tell. To know more about Tata Play IPO stay tuned to Equitymaster.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...