Tata Technologies reported revenue decline of 4.7% QoQ USD versus our estimate of 3.1% QoQ decline. This is in line with performance of Cyient. While services segment saw an expected decline of 1.5% QoQ, the decline in technology solutions segment was much steeper (of 15.6% QoQ). Within services segment, auto subsegment declined by 2.7% while non-auto offset it partially with 4.7% QoQ uptick. The non-auto (includes aerospace) segment has seen four straight quarters of robust growth. This is in line with the rest of ER&D results announced (thus far).
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ICICI Securities Report
Tata Technologies Ltd. has reported a sharp QoQ revenue decline of 4.7% USD in Q4 FY25, similar to revenue contraction reported by Cyient-DET (-3% QoQ) and Tata Elxsi (-5.5%), due to:
Sharp drop in technology solutions segment -15.6%,
slump in auto segment -2.7%.
A few positives include:
Ebit margin expansion of 20bps QoQ,
BMW joint venture led PAT margin expansion of 190bps QoQ,
positive traction in aerospace segment: - up 8% QoQ.
For FY25, it reported a decline of 1.2% USD, with underperformance prevailing since the VinFast ramp-down. Though aerospace, battery engineering and BMW JV segments are panning out well, we expect a slow recovery from challenges in automotive segment and projectbased nature of Tata Technologies' technology solutions segment. Maintain Sell at Mar'26E target price of Rs 510 based on one-year forward PE of 25 times.
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