Shares of Tata Technologies on Friday fell 2% to the day’s low of Rs 989 on BSE after the company recorded a 15% year-on-year (YoY) decline in its quarterly net profit at Rs 162.03 crore.
The company’s net profit was weighed down by an increase in expenses incurred for the purchase of technology solutions. Sequentially, the net profit has increased by 3.04%.
Revenue from operations for the quarter stood at Rs 1,269 crore, up 0.9% from a year ago but down 2.5% sequentially.
The management highlighted that the impact of losing key customer VinFast is behind, and the company is back on track to accelerate its services business. The Vietnamese electric vehicle maker was heavily weighing down on Tata Tech’s revenue and brokerages had cut their growth forecasts highlighting client concentration risk.
Here is how brokerages view the result:
Kotak Institutional Equities: Sell | Target price: Rs 650
The company reported a weak quarter with sequential revenue and profitability decline.
While the revenue hit from residual ramp-down at Vinfast was known, phasing out of a couple of contracts at large clients was a surprise. Low margin and lumpier education business partly offset revenue decline.
The domestic brokerage firm cut EPS by 12-15% over FY2025-27E.
JM Financial: Buy | Target price: Rs 1,250
Management sees the 1Q decline in services as transitory. The absence of Vinfast decline and resumption of delayed projects should help accelerate sequential growth from Q2 onwards. 5 deal wins across auto and aerospace should help too. BMW JV, on track for a 2H start, should ensure consistent growth through FY25.
Despite the revenue decline, resilient margins (-20bps) indicate a sharp cost focus. That should continue. A weaker start to the year however drives a 500bps cut to our FY25E USD revenue estimate.
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