Tata Group, one of India’s largest and most diversified conglomerates, is considering spinning off its battery division, Agratas Energy Storage Solutions, into a separate entity that could go public in the future, according to sources familiar with the matter.

Agratas, which designs and manufactures batteries for electric vehicles (EVs) and renewable energy storage, is part of Tata’s green energy portfolio that also includes solar power, wind power, and hydrogen fuel cells. Agratas supplies batteries to Tata Motors and its subsidiary Jaguar Land Rover, which are both leading players in the EV market.

The sources said that Tata is in the early stage of discussions about the potential spinoff, which would allow Agratas to raise external capital more freely and chart its own high-growth journey. An eventual domestic IPO of the unit could garner a valuation of $5 billion to $10 billion depending on its growth and market sentiment, they said.

Agratas requires sizable investments to develop manufacturing hubs to produce batteries at scale for the growing demand from EVs and energy storage. As part of Tata, fundraising options remain limited. But as a standalone unit, Agratas would have more flexibility. In fact, the company is already in talks with banks to secure $500 million in green loans for factory expansion.

Tata, however, hasn’t made a final call yet on the spinoff and may decide against proceeding with it, the sources said. A representative for Tata declined to comment.

The move, if it materializes, would be part of Tata’s strategic rejig of its green energy portfolio, which aims to leverage its leadership across EVs, batteries, and renewable energy. Tata Motors last month regained its position as India’s most valuable carmaker due to its strong position in sports utility vehicles and EVs. The company’s most recent quarterly earnings beat estimates after Jaguar Land Rover had its best profit in seven years.

Tata is also exploring similar spinoff plans for its EV business as some of the existing investors may want to exit, one of the sources said. The EV operation may go public as a separate company at a later stage, the source said.

Tata’s plan to create a new battery company and launch its IPO reflects its ambition to tap into the huge potential of India’s electrification market, which is expected to grow rapidly in the coming years as the country shifts to cleaner and more efficient sources of energy.

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