Tata Technologies surges 7% on JV with BMW to develop automotive software

Shares of Tata Technologies soared 7.4 per cent at Rs 1,127 a piece in Tuesday’s intraday day trade after the company informed the bourses about a joint venture (JV) with German automotive giant BMW.

The purpose of this joint venture is to create an automotive software and IT development hub in India. The agreement between the two companies entails setting up operations in Pune, Bengaluru, and Chennai, as detailed in a joint statement released by both parties.

The JV will deliver automotive software, including Software-defined Vehicle (SDV) solutions for BMW Group's premium vehicles and digital transformation solutions for its business IT. "It will commence operations with 100 innovators and intends to grow quickly to a four-digit number in the following years", the company said in an exchange filing. 
 

The JV will become part of BMW Group's global network of software and IT hubs. "Our collaboration with the BMW Group demonstrates our commitment to providing top-tier solutions in automotive software and digital engineering to customers across the world," Tata Technologies CEO and MD Warren Harris said.

At 11:52 AM, the stock of the company was trading 6 per cent higher at Rs 1,112.70. In comparison the BSE S&P Sensex was down 0.23 per cent at 74,843. 

Tata Technologies share prices have retreated 15 per cent in the last six months and have shed 5.6 per cent in share value year to date. The stock is currently trading at a price to equity multiplier of 57 times. 

Brokerage firm JM Financial in its latest report kept a ‘BUY’ rating for Tata Technologies with a target price of Rs 1,370. It expects marginal growth of 0.2 per cent in the company’s revenues for the Jan-March quarter of FY24 with services revenue to be flat quarter-on-quarter (QoQ) driven by ramp-down in Vinfast account. 

However the brokerage estimates 0.7 per cent QoQ growth in company's education business.  Analysts further expect operating leverage and efficiencies to drive a 35 bps margin expansion to 16.6 per cent in Q4FY24. 

For the quarter  ending December 31, 2023 Tata Technologies reported 14.7 per cent surge in net profit, reaching Rs 170.2 crore. In the second quarter of FY24, the company reported a net profit of Rs 160.4 crore. 

During the third quarter, total revenue amounted to Rs 1,289.5 crore, marking a 1.6 per cent increase compared to Rs 1,269.2 crore in the preceding September quarter of FY24.