On Friday, Goldman Sachs (NYSE:GS) adjusted its outlook on Tata Technologies (TATATECH:IN), reducing the price target to INR850 from INR900 while maintaining a Sell rating on the stock.
The firm's analyst cited a weaker-than-expected performance in the first quarter of fiscal year 2025, noting a quarter-over-quarter decline in revenue and EBITDA of 2.5% and 8%, respectively. These figures fell short of the Bloomberg consensus by 5% for revenue and 9% for EBITDA.
The reported downturn was attributed to the timing of business in the company's smaller technology solutions segment and a decrease in revenue from Vinfast customer activities in the core Services (Auto) business. Despite this, management anticipates a rebound in growth over the second, third, and fourth quarters of the fiscal year.
The analyst highlighted positive developments in the Automotive vertical, excluding Vinfast, where Tata Technologies has secured promising commercial vehicle and passenger vehicle deals.
Additionally, the firm noted that electric vehicle research and development continues to be robust among underlying customers, as evidenced by the revenue growth in the Transportation and Mobility businesses of peers LTTS and Tata Elxsi in the same quarter.
The softened performance of Tata Technologies was described as more non-core and customer-specific, expected to balance out over time.
Consequently, Goldman Sachs has revised its top-line growth estimate for fiscal year 2025 to 9.4% year-over-year, down from 13.6%. Furthermore, the firm has reduced its earnings per share estimates for fiscal years 2025 to 2027 by up to 5%. The new 12-month price target reflects these adjustments.
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