Axis Capital has initiated a Reduce call on Tata Tech, setting a target price of Rs 950, which represents a downside potential from the current market price of Rs 1,051. The brokerage firm has highlighted concerns about growth cuts, rising client concentration, and high valuations.
Key points from Axis Capital’s report:
- Growth Challenges: Tata Tech continues to face challenges with growth cuts, despite some relief expected from the easing of VinFast ramp-down headwinds. Axis Capital remains cautious about the company’s near-term prospects.
- Increasing Client Concentration: A key concern raised by Axis Capital is the increase in anchor-client concentration, reversing the recent progress made by Tata Tech in diversifying its client base. This could limit the company’s ability to mitigate risks tied to specific clients.
- Valuation Concerns: Despite underperformance year-to-date (YTD), Tata Tech’s valuations remain high, prompting Axis Capital to issue a Reduce call on the stock.
- Future Client Concentration Risks: Looking ahead to FY25, Axis Capital expects client concentration to increase further, which could pose additional challenges for the company as it seeks to maintain its growth trajectory.
Axis Capital’s concerns revolve around the increasing reliance on a concentrated client base, high valuations, and ongoing headwinds in the company’s growth outlook, prompting its cautious stance on the stock.
Disclaimer: Stock market investments are subject to market risks. This article is for informational purposes only and should not be construed as investment advice. Please do your own research or consult a financial advisor before making any investment decisions.
