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Informist, Thursday, Jul. 10, 2025

By Arya S. Biju 

MUMBAI – Weakness in services and technology solutions segments amid continued slowdown in the automotive segment is expected to hit engineering, research and development major Tata Technologies Ltd.'s earnings for the June quarter. The company is expected to report its highest ever sequential fall in both the top line and the bottom line since November 2023, when it debuted in the stock market.

Delay in ramp-up of existing deals and a slower pace of new deal closures led by the global demand slowdown and uncertainty related to US tariff measures are expected to impact the June quarter earnings of engineering, research and development companies like Tata Technologies.

Its consolidated net profit for the June quarter is expected to decline over 19% sequentially and over 6% on year to INR 1.52 billion, according to the average of estimates from four brokerages. The company's consolidated revenue for the quarter is expected to decline nearly 6% sequentially and 5% on year to INR 12.11 billion, according to average of estimates.

The company is expected to report its lowest net profit and revenue in the latest quarter, since it was listed on the exchanges. Nirmal Bang Equities Pvt. Ltd. has the highest estimate of INR 1.57 billion for net profit, while Prabhudas Lilladher Pvt. Ltd. has the highest revenue estimate of INR 12.30 billion. ICICI Securities Ltd. has the lowest estimate for both net profit and revenue at INR 1.48 billion and INR 11.91 billion, respectively. 

In constant currency terms, the company's revenue is expected to decline 5.7-8.3% sequentially for the latest quarter, estimates from three brokerages showed. Revenue in dollar terms is expected to decline 6% sequentially led by a high single decline in sales across service and technology solutions segments, ICICI Securities said in an earnings preview note. 

Revenue from the company's largest segment, services, which contributed nearly 80% to the company's total sales during the March quarter, is expected to decline on a sequential basis driven by a slowdown in the automotive segment. During the previous quarter, automotive segment contributed to 83% of total sales in services segment. However, Kotak Institutional Equities expects moderating investments by anchor clients in the segment to be partly offset by the growth in the aerospace vertical. 

Kotak expects a sharp decline in sales in the company's technology solutions segment due to delayed project ramp-ups in products and education operations. The remaining 20% of the company's total sales during the previous quarter came from this segment. 

The Tata group-owned company's earnings before interest and tax margin is expected to decline 144-180 basis points in the quarter due to the sharp decline in revenues, estimates from four brokerages showed. During the March quarter, the company's EBIT margin improved 60 bps sequentially to 16.7%. 

Tata Technologies will announce its June quarter earnings on Monday. Given the expected weak start to the financial year 2025-26 (Apr-Mar) and continued tepid demand environment, investors will watch out for the management commentary on factors that support its double-digit revenue growth aspiration for FY26. Investors will also look for impact of US tariff-related uncertainty on decision making by clients. 

Commentary on impact of weakness in anchor clients, Tata Motors and Jaguar Land Rover, and medium-term outlook on their spending towards the company will also be monitored. Updates on the company's joint venture with BMW group and demand outlook for the rest of FY26 will be monitored. 

On Friday, shares of the company closed flat at INR 708.80 on the National Stock Exchange. The stock has risen a little over 2% since the announcement of its March quarter earnings on Apr. 25.

Of the four reports available on the company with Informist, three have a 'sell' or equivalent rating on the stock with an average target price of INR 600, while JM Financial Institutional Securities Ltd. has a ‘buy' rating on the stock with a target price of INR 850. 

The following are the Apr-Jun earnings estimates for Tata Technologies based on reports from four brokerages in descending order of the estimate of net profit: 

End

US$1 = INR 85.82

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Akul Nishant Akhoury

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