Tata Technologies share price slumps 5% on weak Q4 results. Time to buy the stock?

Tata Technologies share price slumped 5% on Monday’s session following company’s subdued Q4 results. For the quarter that ended on March 31, 2024, Tata Tech recorded a consolidated net profit of ₹157.24 crore, a decline of 27% from the ₹216.56 crore reported in the same period last year. Tata Technologies share price opened at ₹1,044.95 apiece on the BSE, the stock touched an intraday low of ₹1,032.95 and an intraday high of ₹1,055.05.

Comparing the profit after tax (PAT) to the ₹170.22 crore recorded in Q3FY24, there was an almost 8% quarterly decline.

Consolidated revenue from operations for the quarter under review was ₹1,301.05 crore, down 7.22% YoY from the ₹1,402.39 crore recorded during the same period last year.

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In comparison to ₹624.03 crore in FY23, the PAT for the entire fiscal year was recorded at ₹679.37 crore. On revenue, there was a 16% increase in FY24 compared to FY23’s revenue of ₹4,501.92 crore.

Subject to shareholder approval at the AGM, the board recommended a special dividend of ₹1.65 per equity share and a final dividend of ₹8.40 per equity share.

The Chief Executive Officer and Managing Director of Tata Tech, Warren Harris, stated that for the past three years, operating revenue has increased at a rate of 29% CAGR, while operating EBITDA has increased at a rate of 35% CAGR. In FY24, the business signed twelve significant agreements, five of which were in the $15–$25 million range and one contract for more than $50 million. The enormous transaction pipeline is still in good shape and is still expanding.

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According to Brokerage JM Financial’s analysis, Vinfast’s ramp down dragged services as expected. ExVinfast, on the other hand, reported a staggering 10.4% QoQ (+30% YoY) growth in services for FY24. Crucially, this expansion encompassed both anchor and non-anchor clientele. This is in addition to services’ USD sales growing at a 30% CAGR in FY21–2023. These illustrate the portfolio’s resilience and diversification at Tata Tech. Deals involving BMW and Aerospace will only provide further momentum.

The brokerage firm rates the stock as a “buy,” estimating a potential upside of 29.7% with a target price of ₹1,410.

“We build 11% Services USD revenue growth in FY25 (vs 9% in FY24), lower than before on residual Vinfast decline in 1Q. We now expect flat margins in FY25 driving 1-2% cuts to our FY25-26E EPS. Our target price rolls forward to ₹1,410 (from ₹1,370). Tata Tech has more growth engines now than a few years ago. That should help sustain the underlying momentum, in-turn supporting multiples. BUY,” the brokerage said.

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Disclaimer: The views and recommendations above are those of individual analysts, experts and brokering companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.