Citi Research remains unconvinced by Tata Technologies’ Q1FY26 numbers, retaining its ‘Sell’ rating and a more bearish target price of ₹450, reflecting concerns over sluggish growth in key segments and margin headwinds.
For the quarter, Tata Tech reported a 9.9% decline in net profit to ₹170.3 crore, with revenue falling 3.2% to ₹1,244.3 crore. EBIT margins dropped from 15.73% to 13.57%, led by weakness in the company’s core services business, particularly in the automotive vertical and integrated manufacturing (IHM) segment.
Citi said the 7.6% QoQ and 6.3% YoY decline in constant currency services revenue was in line with expectations but still disappointing. The sharp revenue fall hurt operational efficiency, leading to a significant EBIT margin decline. The impact was offset slightly by aggressive cost controls in SG&A.
Citi has now cut its FY2026-28 earnings estimates by 4-5%, forecasting a 5% revenue decline in FY26. The firm is especially wary of prolonged weakness in Tata Tech’s automotive client base and remains skeptical about the company’s ability to return to sustainable growth in the near term.
