On Friday, an analyst at Kotak Securities adjusted the price target for Tata Technologies (TATATECH:IN), bringing it down to INR 650.00 from the previous INR 700.00. Despite the reduction, the firm has decided to keep a Sell (4) rating on the stock.
Tata Technologies experienced a challenging quarter, with sequential declines in both revenue and profitability. The revenue shortfall was partly anticipated due to the winding down at Vinfast, but the phasing out of several contracts with major clients came as an unexpected development.
The company's earnings before interest and taxes (EBIT) margin decreased by 30 basis points, settling at 15.9%. In response to these outcomes, Kotak Securities has revised its earnings per share (EPS) forecasts downwards by approximately 12-15% for the financial years 2025 to 2027. Additionally, the fair value estimation for the stock has been adjusted to INR 650, down from the earlier INR 700.
Despite the downward revision, the firm's projections for Tata Technologies' service revenue compound annual growth rate (CAGR) remain optimistic, with an expectation of 12.1% over the period from FY2024 to FY2027.
This forecast is considered generous in light of the recent financial performance. The analyst's closing remarks emphasized the recommendation to retail investors, suggesting they maintain a Sell position on the company's shares.
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