Earnings Outlook
Weak services, tech verticals to drag Tata Tech's numbers
This story was originally published at 19:47 IST on 24 April 2025
Register to read our real-time news.Informist, Thursday, Apr. 24, 2025
By Arya S. Biju
MUMBAI – Tata Technologies Ltd. is expected to report subdued earnings for the March quarter, weighed down by softness in its services and technology solutions segments. On a sequential basis, the company is expected to post a marginal growth in its bottom line, while its top line is expected to decline, according to analysts.
The engineering and digital solutions company is expected to post a consolidated net profit of INR 1.70 billion for the March quarter, up marginally from INR 1.69 billion reported in the previous quarter, according to an average of estimates from four brokerage firms. Among them, Kotak Institutional Equities gave the highest estimate for the company's bottom line for the March quarter at INR 1.73 billion, while ICICI Securities Ltd. gave the lowest estimate of INR 1.68 billion. In the December quarter, the company had reported a 7% sequential rise in its consolidated net profit, marking its highest ever growth since the September quarter of 2023.
The company's consolidated revenue for the quarter is expected to decline over 1% sequentially to INR 13.04 billion, according to an average estimate from four brokerages. InCred Research Services Pvt. Ltd. had the highest estimate of INR 13.14 billion for the company's top line, and JM Financial Institutional Securities Pvt. Ltd. had the lowest estimate of INR 12.96 billion. On a year-on-year basis, the company's bottomline is seen rising close to 8% while the top line is expected to rise only by 0.2%.
In dollar terms, the company's revenue is expected to see a low-single-digit sequential decline. ICICI Securities expects the company to report a 3% sequential decline in its revenue in dollar terms, because of a 10% sequential decline in sales from its technology solutions segment and 1% decline in revenue from its service segment. It expects a slowdown in the automotive portfolio and uncertainty due to policy changes by the US government to have impacted demand in the services segment of the company.
JM Financial expects the company's revenue in dollar terms to fall 3.6% on quarter, on account of a 120 basis points impact from cross-currency headwinds. In constant currency terms, Tata Technologies is expected to report a 2.7% sequential decline in revenue for the quarter, Kotak Institutional Equities said in an earnings preview note. It expects the weakness in the services segment due to moderating investments by anchor clients to be partly offset by the growth in the company's aerospace vertical.
Analysts were divided on how the company has fared in terms of operating margin or earnings before interest and tax margin in the latest quarter. While ICICI Securities and JM Financial expect the company's EBIT margin to decline by 30-35 bps sequentially due to wage hikes and negative revenue growth leverage, Kotak Institutional Equities expects it to improve 30 bps on quarter driven by operating efficiency. InCred Research Services, however, expects the EBIT margin to remain flat on quarter. It expects the company's margin to be supported by depreciation of the rupee.
The company's earnings before interest, tax, depreciation, and amortisation for the quarter is expected to be INR 2.35 billion, marginally up from the INR 2.34 billion reported in the December quarter, Kotak Institutional Equities said. On the other hand, JM Financial expects it to fall by 3.4% on quarter to INR 2.26 billion. However, the brokerage expects the contribution from the company's joint venture with BMW group, BMW TechWorks India, to support Tata Technologies' bottom line for the quarter.
The company will announce its Jan-Mar earnings on Friday. Investors will watch out for management commentary on the impact of new policies and tariffs by US government on client decision-making, outlook on spends by anchor clients and Tata group entities, and update achieving 20% or higher margin target, according to analysts.
Management comments on demand recovery in the automotive and engineering research and development segments in the US and Europe and updates on ramp-up and margin impact of BMW TechWorks India will also be monitored. Investors will also look for comments on demand trends across segments, and deal momentum and updates on FY26 revenue and margin outlook.
On Thursday, shares of Tata Technologies ended at INR 717.20 on the National Stock Exchange, down 0.5%. The stock has fallen over 10% since the announcement of its December quarter earnings on Jan. 21 and nearly 49% from its all-time high of INR 1,400 hit on Nov. 30, 2023.
Following are the Jan-Mar earnings estimates for Tata Technologies based on reports from four brokerages, in descending order of the estimate of net profit:
| Brokerage firm | Net Sales | Net Profit | EBITDA |
| -------in INR million-------- | |||
| Kotak Institutional Equities | 12,993.00 | 1,733.00 | 2,353.00 |
| JM Financial Institutional Securities Pvt. Ltd. | 12,956.00 | 1,702.00 | 2,264.00 |
| InCred Research Services Pvt. Ltd. | 13,143.00 | 1,680.00 | -- |
| ICICI Securities Ltd. | 13,070.00 | 1,675.00 | -- |
| Average | 13,040.50 | 1,697.50 | |
End
Edited by Ashish Shirke
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