5 Minutes Read
Tata Technologies shares plunge after more pain anticipated from VinFast
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
Listen to the Article (6 Minutes)
Summary
Shares of Tata Technologies are down 13% from their listing price of ₹1,200.
Shares of Tata Technologies Ltd., the first Tata Group listing in two decades are down as much as 5% on Monday after the company’s March quarter results.
Tata Technologies highlighted that the anticipated ramp down within VinFast, a key customer, led to a decline in services revenue during the quarter. It expects to see further run-off from VinFast in the June quarter as well.
Services business for Tata Technologies fell by 1% sequentially in constant currency terms. Ex-VinFast, the services business grew by 10% sequentially.
Brokerage firm Kotak Institutional Equities wrote in its note that VinFast contributed $6 million to $7 million in revenue during the March quarter, which is a 60% drop sequentially and a 80% drop year-on-year. For financial year 2024, its contribution to Tata Technologies’ services business stood at $70 million.
“Revenue from the VinFast account will further moderate in Q1 of financial year 2025 before stabilising and the account will continue to be a drag on revenue growth in financial year 2025,” the brokerage wrote in its note.
The brokerage has cut its financial year 2025 to 2027 Earnings per Share (EPS) estimates by 1% to 2% on marginally higher-than-expected drag due to VinFast. It cites increasing client concentration as a risk, even as it expects the company to benefit from elevated spends by anchor clients and tailwinds in the auto sector.
JM Financial believes that BMW and Aerospace deals signed by Tata Technologies will add further growth impetus to the company. It has also cut its EPS estimates for financial year 2025 and 2026 by 1% to 2% in anticipation of flat margins in the current financial year.
The brokerage has a “buy” rating on the stock with a price target of ₹1,410 from ₹1,370 earlier.
Shares of Tata Technologies are trading 3.7% lower at ₹1,046.25. While the stock is still up 100% from its issue price of ₹500, it is 13% below its listing price of ₹1,200.
Tata Technologies was one of the most successful listings of 2023, listing at a 140% premium to its issue price.
Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout
3 Mins Read
Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter
Daily Newsletter
