Tata Technologies share dips 3% as brokerages slash target price post Q3

Tata Technologies share price slumped 3.39 per cent, while also hitting its 52-week low at Rs 789 a piece and on the BSE in Wednesday’s intraday trade. This came after the company reported a marginal decline in its net profit for the third quarter of the financial year 2024-25 (Q3FY25).

 

Analysts gave differing views on the future prospects of Tata Technologies, while agreeing that it reported a decent quarterly financial performance overall led by diversified offerings, surpassing their moderate expectations. 

 

Seasonal softness in the services segment was offset by uptick in product business. Within Services, Auto was down 1per cent QoQ but was made up by strong growth in Aerospace up 39 per cent QoQ, analysts said. 

 

“The broad offerings – across verticals will hold it in good stead going ahead as well, while the demand environment is still far from conducive. Clients’ budgets will likely balance new development vs. cost efficiency, EV/Hybrid vs. ICE and SDV vs. mechatronics. TATATECH seems well positioned to capture demand in varying scenarios, limiting significant fluctuations to its performance,” analysts at JM Financial said in a note.

 

The company’s management hopes that the demand could bottom in two quarters’ time. On similar hopes of earnings bottoming, JM financial upgraded its earning per share (EPS) by 1-3 per cent. At 34 times its FY27 EPS estimates, lowest since listing, stock too has bottomed, the brokerage said, giving a ‘Buy’ call on the stock with a target of Rs 1,150. 

 

Meanwhile, those at Kotak Institutional Equities said that the company’s Ebit margin declined 40 bps QoQ to 15.5per cent due to the impact of wage hike. The brokerage expects a marginal decline in services revenues in FY2025E due to the weak demand environment and moderating revenue growth at anchor clients. 

 

“We incorporate BMW JV, leading to a 6-9 per cent increase in FY2026-27E EPS. Our FV rises to Rs 700 (from Rs 650). Retain SELL,” Kawaljeet Saluja, Vamshi Krishna and Sathishkumar S of KIE wrote in a report. 

 

Analysts at Axis Securities also maintained their ‘Reduce’ stance, cutting the target to Rs 840, per share, while the international brokerage firm also retained its ‘Sell’ rating  and slashed target price to Rs 765 per share, according to reports. 

 

Financial print

Tata Technologies posted a net profit of Rs 169 crore in Q3FY25, marginally down from Rs 170 crore a year ago but up 7 per cent sequentially from Rs 157 crore in Q2FY25. Revenue rose 2 per cent Y-o-Y to Rs 1,317 crore, with a 1.6 per cent sequential increase from Rs 1,296 crore.  

 

Operating Ebitda stood at Rs 235 crore, with an Ebitda margin of 17.8 per cent, while the net profit margin improved by 70 basis points sequentially to 12.8 per cent. The company’s workforce reached 12,659, and the attrition rate dropped 20 basis points to 12.9 per cent.