Target: ₹850

CMP: ₹705.95

Tata Technologies; headline revenues (-3.3 per cent vs. JMFe: -2.4 per cent) missed expectations. Underlying construct was not bad though. Core services revenues (flat q-o-q) were in-line. Miss was led by sharper than expected decline in Tech Solutions (-14 per cent q-o-q vs JMFe: -10 per cent), which should recover starting Q2.

Tata Technologies’ Q4, and FY25, performance underscores the effects of its diversification efforts. In 4Q, weakness in Auto (-3 per cent q-o-q) was offset by sustained momentum in Aerospace (+8 per cent q-o-q). In fact, Aero revenues have almost doubled in FY25. Within Auto, Tata Motor’s resilience balances challenges facing global OEMs.

For FY25, 12 per cent y-o-y growth ex-Vinfast helped absorb the planned ramp-down in Vinfast. JV with BMW – a USD 500 million TCV opportunity – though not visible on the topline, helps de-risk earnings. These should help Tata Technologies navigate the uncertain demand environment. It can leverage BMW relationship to make further in-roads in other German OEMs, as they look to offshore more – a prospect looking increasingly probable.

Q4 miss, especially Tech Solutions, is flowing into 2-3 per cent cut to our FY26-27E USD revenue estimates. Faster than expected ramp-up in BMW JV however limits changes to FY26E EPS (+2 per cent). Maintain BUY with ₹850.

Published on April 28, 2025