Shares of Tata Technologies rose nearly 3% in opening trade on July 15, as investors found comfort in the company's confident outlook for the remainder of FY26 despite a subdued performance in the first quarter.
The Tata Group engineering services firm reported a net profit of ₹170.28 crore for Q1 FY26, marking a 5% rise year-on-year from ₹162 crore in the same quarter last year. However, on a sequential basis, profit fell around 10% from ₹189 crore reported in Q4 FY25.
Revenue from operations came in at ₹1,244 crore, down 2% on year and over 3% lower sequentially from ₹1,286 crore last quarter. In constant currency terms, revenue dropped 5.3% to $145.3 million from $152.1 million.
The company’s Ebitda margin stood at 16.1%, with operating Ebitda crossing ₹200 crore. While the margin missed fell short by 80 basis points as compared to market expectations, Tata Tech’s management offered an upbeat tone in their commentary, outlining hopes for a sequential improvement in the second quarter and a stronger second half.
“We are very confident that FY26 will not see a decline. Q2 should be better than Q1, and we expect a strong H2,” the company said during its post-earnings commentary. “We are confident of margin trending towards 18% this year, and our north star remains 20%.”
Despite the management’s optimistic tone, analysts still stood cautious. Goldman Sachs maintained a ‘sell’ rating on Tata Tech shares, with a target price of ₹560. The brokerage noted that while the Q1 numbers were broadly in line, the 4.6% sequential revenue drop in constant currency terms and a miss on margins weighed on the overall print. The underperformance in core services and negative operating leverage were cited as key reasons behind the cautious stance.
Still, there were also some early signs of turnaround. Tata Tech management highlighted stronger customer engagement and deal wins in June, which they expect to translate into a revenue rebound in Q2. The company stated that this guidance was not dependent on the resolution of any tariff-related issues, suggesting a more structural recovery ahead.
