Tata Technologies shares decline 5% post weak Q4FY24 results; JP Morgan sees over 26% downside

Tata Technologies shares fell in Monday’s trade (May 6, 2024) by as much as 5 per cent to Rs 1032.95 after the global brokerage JP Morgan maintained its ‘underweight’ call on the Tata Group company post its weak Q4 results. The set target of Rs 800 by the brokerage implies a downside of a substantial 26 per cent from the last close.

In early trade at around 9:26 am, shares of the company traded with a cut of 3.74 per cent at Rs 1045.25 apiece on the BSE. 

JP Morgan held that the company’s Q4 margins came in-line and would likely be maintained in FY25. 

On Friday after market hours,  the leading global engineering services company reported 27.41 per cent decline in consolidated net profit for Q4FY24 to Rs 157.24 crore as against Rs 216.56 crore in the corresponding period of the previous fiscal year. The consolidated revenue from operations declined 7.2 per cent YoY to Rs 1,301 crore from Rs 1,402.40 crore YoY.

In USD terms, total operating revenues came in higher by 1.2 per cent sequentially to $156.6 million. Services segment revenues came in at $120.2 million.

Furthermore, operating EBITDA stood at Rs 240 crore, while EBITDA margin during the period under review came in at 18.4 per cent as against 17.3 per cent in the dame period last year.

“I am delighted with the way our business performed in FY24 with revenue growth of 15.9% and a 15% growth in operating EBITDA. In the last 3 years, our revenue from operations has grown at 29% CAGR while Operating EBITDA grew at a 35% CAGR. We closed a total of 12 large deals in FY24 which included one $50 Mn plus deal, and five deals in the $15 to $25 Mn range," noted the company's Chief Executive Officer and Managing Director- Warren Harris.

Brokerages view on Tata Technologies:

Domestic brokerage JM Financial is of the view that the company has more growth engines now than a few years back. That should help sustain the underlying momentum, in-turn supporting multiples, added the brokerage. The brokerage continues with its 'buy' rating on the stock with a 1-year target of Rs 1410, suggesting a potential upside of 30 per cent.

Global brokerage BofA, on the other hand, continues with a buy rating on the stock with a target price of Rs 1,250 per share. 

Tata Tech share price

Since its listing on the bourses on November 30 at a huge premium of 140 per cent over the issue price of Rs 500, the stock has corrected nearly 10 per cent.