Tata Tech Share Price Trades Lower As Citi Research Cuts Target Price On Bleak Third Quarter Outlook

Tata Technologies Ltd. share price was trading lower on Tuesday after Citi Research cut the target price on bleak third quarter outlook.

The New York–headquartered investment bank reduced the target price to Rs 900 from Rs 999, while it retained a 'Sell' rating on the stock. The current target price implied a 9.95% downside from Monday's closing price.

The brokerage cut the target price after Tata Technologies reported a decline in net profit for the quarter ended in September. Its consolidated net profit fell 2.9% on a sequential basis to Rs 157.4 crore in the second quarter, the company said in an exchange filing Monday.

Although, revenue and profitability of Tata Technologies are likely to improve in the second half of the financial year 2024–25, compared to first, the October–December quarter is likely to see slight decline in its margin, Citi Research said in a note on Monday. Seasonally, third quarter is weak, the brokerage noted.

Tata Technologies' management is also expecting a slight decrease in margin as the wage hike will take place from Nov. 1, the brokerage said in the note.

Citi Research revised Tata Technologies' earning estimates for the period financial year 2026 and 2027 by 4–6%. The valuation remains at 45 times of financial year 2025–26 consolidated earning per share estimates, the brokerage said in the note.

According to Citi Research, Tata Technologies' valuation remained too expensive at current multiples.

Citi Research sees Rs 1,120 target price as bull case for Tata Technologies if revenue grows 10% on year in FY25. Higher growth and rupee depreciation may also help Tata Technologies attain the bull case.

For the bear case, Citi Research estimates Rs 800 target price for Tata Technologies stock. This will happen if revenue growth falls to 2% on the year, and lack of currency depreciation weighs on the margin.

Tata Technologies share price rose 1.89% to Rs 1,030.60 apiece only to erase all gains to trade 1.18% lower at Rs 999.50 apiece as of 10:14 a.m., as compared to a 0.56% decline in the NSE Nifty 50 index.

The stock declined 23.88% in 12 months, and 15.2% on year to date basis. Total traded volume so far in the day on NSE stood at 0.45 times its 30-day average. The relative strength index was at 35.97.

Out of 12 analysts tracking the company, four maintain a 'buy' rating, and eight suggest 'sell', according to Bloomberg data. The average 12-month consensus price target implies a downside of 1.5%