Tata Technologies (TATATECH IN) – Q3FY26 Result Update – Hinting positive FY27 outlook, focus on execution – HOLD
Published on 17 Jan 2026
The revenue performance (+2.3% CC QoQ) exceeded our estimates (+0.6% CC QoQ), attributed to outperformance in non-Auto Service (+8.0% QoQ) and lower than anticipated ramp down in anchor account. The organic Service business grew 1.0% QoQ CC, while organic Auto business de-grew ~4-5% QoQ CC (our assumption). The engagement within Aerospace is progressing well and moving upstream to complex engineering activities, it now anticipates Aerospace to become USD40m revenue in FY26. The management was confident of reversing Q3 weakness and deliver double-digit growth in Q4 on the back of stabilizing operations of its Anchor account along with a ramp up in Auto programs (signed in Q3). The continued momentum in Aerospace & IHM, securing large program on full-vehicle development, and early signs of spending recovery in auto OEMs give confidence to the management to drive double-digit organic growth in FY27. However, we believe the high base in Q4 and the lumpiness in Tech Solutions pose incremental risks to achieving double-digit growth, especially as the auto recovery remains in limbo. The BMW JV is progressing well and deployed 1000+ employees, adding further visibility for next year. Our organic growth for FY27/FY28 revised to 8.5%/11.9% (earlier 7.5%/12.9%) YoY CC. On margins, we are cutting our estimates on the EBIT margins by 40bps each in FY27E/FY28E due to higher D&A (ES-Tec integration). We assign 27x to FY28E EPS that translates TP of Rs 660, retain HOLD.
