Tata Technologies shares gained nearly 2% from the day’s low to hit the session’s high of Rs 1,163 on Monday following JM Financial’s buy view on the stock. The brokerage reiterated its stance based on its long-term growth prospects. In its post-earnings stock review, JM Financial dubbed Tata Technologies’ December quarter earnings as largely in line with its expectations.

Tata Technologies, which debuted on the exchanges in November, reported a consolidated net profit of Rs 170 crore for the quarter ended December 2023. The profit is higher by 15% from Rs 148 crore reported in the previous year period. Revenue from operations in the third quarter increased 15% year-on-year to Rs 1,289 crore, compared with Rs 1,124 crore in the corresponding quarter of last year.

Read more: Tata Technologies Q3 Results: Net profit rises 15% YoY to Rs 170 crore
Tata Technologies is a strong play on the electrification opportunity in the automotive sector and its recent partnerships with chip makers Intel and ARM suggest it is expanding its capabilities and the company will address SDV (Software Defined Vehicles) opportunity as well, JM said in a note.

JM also highlighted management’s aspiration to drive 200-250 bps margin expansion over the medium term indicating that earnings growth could be higher and these triggers will help the stock sustain its current valuations.

JM values the stock at 60x 24-month forward EPS and its target price is rolled forward to Rs 1,370.

1) Tata Tech’s headcount has increased by 8% from FY23-end despite ongoing ramp-down in Vinfast. This indicates that the company has been able to redeploy resources and back-fill Vinfast revenues.

2) Strong demand from anchor clients (Tata Motors + JLR) and other EV programs are helping. Vinfast, which is among its top 3 accounts, will likely see its decline complete in Q4 as the project transitions from development to launch support will pave the way for sequential growth acceleration from 1QFY25.

3) 5 large deal wins, including one $50 million and a $25 million deal, lend further visibility. Management has indicated that aerospace, led by Airbus, should provide further impetus to FY25 growth.

(You can now subscribe to our ETMarkets WhatsApp channel)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

(What’s moving Sensex and Nifty Track latest market news, stock tips and expert advice, Budget 2024 News on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

Download The Economic Times News App to get Daily Market Updates & Live Business News.

Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price


Source link