Stock Market Today: Tata Technologies share price gained more than 2% in the morning trades on Tuesday post Q1 results, announced after the market hours on Friday. The gains for Tata Technologies share price were despite weak performance by bellwether Tata Consultancy Services, or TCS, and downward guidance revision on margins by HCl Technologies. Should you buy or sell the stock?
Tata Technologies Q1 Results
Despite a 9.8% sequential fall, Tata Technologies reported a 5.1% year-over-year gain in consolidated net profit for the June quarter, at ₹170 crore. However, the consolidated revenue from operations was down 3.2% sequentially and 1.9% YoY to ₹1,244 crore, as the company’s reported revenue performance across its major segments remained a mixed bag.
Tata Technologies Q1 analyst views
The analysts in general remain cautious looking at the operating environment and challenges faced by IT majors, even though some remain optimistic on the outlook for Tata Technologies. The stock’s valuation and earnings estimates remain key discussion points for investors considering their next move.
Those at JM Financial Institutional Equities said that a weak quarter and a still uncertain macro notwithstanding, management was surprisingly upbeat on the near term. outlook. Improved deal wins remain one of the key reasons, as Tata Technologies won six large deals during Q1, which was the best in the past six quarters. As del wins underpins the confidence, it believes that the current delays/pauses of ongoing OEM programs are temporary in nature and should resume as clarity emerges. No project cancellations thus far underscore their assertion.
Further, the momentum in the aerospace segment (up 13% sequentially) is helping as well. Improving growth trajectory should help recoup Q1 margins, they added, albeit gradually. Better-than-expected growth in the BMW Joint Venture further aids earnings resilience.
Though FY26-28 estimated earnings per share are down marginally by 1-3%, driven largely by a 25-75 bps cut in margin assumptions. Multiples will, however, track top-line growth, which is looking up. JM Financial, therefore, maintains BUY with a revised target price of ₹780 (from 790).
Prabhudas Lilladher, or PL Capital, on the other hand, is not feel comfortable with the valuations in the stock, and hence they don’t expect any upside in the Tata Technologies share price. Prabhudas Lilladher estimates dollar-denominated revenue and earnings compounded annual growth rates of 5.1% and 10.2% over FY25-FY27 estimated. The stock is currently trading at a PE of 35 times FY27 earnings estimates as per PL Capital, and they are assigning a price to earnings of 28 times FY27 estimates with a target price of ₹570, thereby maintaining their SELL rating.
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage companies and not of Mint. We advise investors to check with certified experts before making any investment decisions
