Q3 Results Review and Expectation on Tata Technologies Ltd

Tata Technologies Limited is a global engineering services company offering Product Development and Digital Solutions. • Q3FY25: reported a decent quarter, better than our moderated expectations. • Management expects some tapering of demand for EVs in the near term. • We expect a marginal decline in services revenues in FY25E due to the weak demand environment and moderating revenue growth at anchor clients. • We incorporate BMW JV, leading to a ~6-9% increase in FY26-27E EPS. Q3FY25 Earnings update: Positives: • TTL reported services segment revenue growth of 1.1% c/c qoq (KIE: 0.3%). • Overall revenue growth was 1.7% qoq (KIE: 0.1%). Negatives: • Automotive vertical’s revenues declined by ~1% qoq, impacted by the general weakness in demand and some slowdown in spends by anchor clients. • EBIT margin declined by 40 bps qoq to 15.5%. • Reported PAT was Rs169 cr, down 0.9% yoy despite higher other income from the fair value gain of call/put option related to the BMW JV.