On Tuesday morning, Tata Technologies witnessed a 2% surge in its share price, despite mixed performance in its Q1 FY25 results and broader IT sector weakness. This unexpected rally has caught the attention of investors, especially in the wake of weak showings from larger IT peers like Tata Consultancy Services (TCS) and HCL Technologies, which recently revised their margin guidance downward.
Let’s take a deeper look into the company’s performance, analyst opinions, and whether Tata Technologies stock deserves a place in your portfolio.
Tata Technologies Q1 FY25 Results Highlights
Net Profit:
- ₹170 crore, up 5.1% YoY, despite a 9.8% sequential fall.
This suggests that while the quarter faced challenges, the company maintained annual growth.
Revenue from Operations:
- ₹1,244 crore
- Down 3.2% QoQ
- Down 1.9% YoY
Revenue contraction came as a result of mixed performance across major business segments. While the overall environment was challenging, the company showed resilience in some key verticals.
Key Segments Performance
- Aerospace Segment:
- Showed a 13% sequential growth, indicating continued strength and rising opportunities in the defense and aerospace space.
- BMW JV Performance:
- Continued strong performance, offering earnings resilience and partially offsetting weaknesses elsewhere.
- Deal Wins:
- Tata Technologies secured six large deals, its best deal pipeline in six quarters. This has boosted management’s confidence in medium-term growth.
Analyst Views: Mixed Sentiments
JM Financial: Optimistic Outlook
JM Financial maintains a BUY rating, citing several positives:
- Strong deal wins point to future revenue visibility.
- The macroeconomic uncertainty is acknowledged, but no project cancellations is a reassuring sign.
- Belief that current delays in OEM programs are temporary.
- Target price revised from ₹790 to ₹780 due to slight margin assumption cut (25-75 basis points).
- FY26-28 earnings per share (EPS) estimates revised down by 1-3%, but topline growth remains encouraging.
Verdict: BUY
Target Price: ₹780
Prabhudas Lilladher (PL Capital): Cautious Stance
PL Capital holds a SELL rating, citing concerns over high valuations:
- Tata Tech is trading at a PE ratio of 35x FY27 earnings, which they consider steep.
- Assigning a more conservative PE of 28x, they estimate a fair value target of ₹570.
- Dollar-denominated revenue CAGR (FY25–FY27) is estimated at 5.1%, and earnings CAGR at 10.2%.
- PL Capital is not convinced of strong upside potential in current market conditions.
Verdict: SELL
Target Price: ₹570
Investor Dilemma: Buy, Hold, or Sell?
Given the conflicting analyst views, here’s how investors can consider their options:
Reasons to Stay Invested or Buy:
- Strong pipeline with large deal wins.
- Positive growth in niche segments like aerospace.
- BMW JV continues to offer earnings support.
- Management confidence suggests potential for rebound in coming quarters.
Reasons to be Cautious or Sell:
- Weak Q1 results could reflect larger cyclical issues in the IT sector.
- High valuation (PE of 35x) raises concerns about limited upside.
- Macroeconomic uncertainties, especially in the automotive and manufacturing IT services segment, may impact short-term growth.
Technical View (As of July 15, 2025)
- CMP (Current Market Price): ₹700 approx.
- 52-week high: ₹1,400 (post listing highs)
- Short-term support: ₹665
- Resistance zone: ₹740–750
Traders may expect some resistance near ₹750, and investors can watch the ₹665 level for trend reversal or breakdown signs.
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