Tata Tech shares rally 8% after Q2 results, but Goldman Sachs and JM Financial stay bearish. Here's why

Shares of Tata Technologies rallied 8% to Rs 808 on the BSE on Thursday after the company reported a 4% year-on-year (YoY) increase in second-quarter net profit to Rs 171 crore for the quarter ended September 30, 2026, compared with Rs 166 crore a year earlier.

Operating revenue grew 28% YoY to Rs 1,699 crore, driven by strong momentum in the services business and continued demand from automotive and manufacturing clients. Services revenue rose 34% to Rs 1,356 crore.

Operating EBITDA increased 32% YoY to Rs 273 crore, with the EBITDA margin expanding 40 basis points from a year earlier to 16.1%, remaining flat sequentially. Net income margin stood at 10.1%. In dollar terms, services revenue grew 4.3% quarter-on-quarter in constant currency to $142 million. Tata Technologies had a workforce of 12,895 employees, while last-twelve-month attrition stood at 15.6%.

Buy, sell or hold Tata Tech shares?

Goldman Sachs maintains a Sell rating on Tata Technologies but has raised its target price to Rs 560 from Rs 540. The company's Q2 performance was in line with expectations, with constant currency revenue growing 1.9% QoQ.

Tata Technologies has secured a $138 million deal with a luxury European OEM, with revenue ramp-up expected to begin in the second half of FY27. The brokerage reiterated its expectation of double-digit organic revenue growth in FY27, while the marginal increase in the target price reflects recent deal wins and steady operational execution.

JM Financial has maintained a Reduce call on the stock with a price target of Rs 735 per share. It says key factors to monitor include automotive demand in Germany, technology segment, and margin trajectory. While large deals enhance second half growth visibility, as that's reflected in the stock price, JM Financial said in a note.

Tata Tech management reiterated their expectation of strong double-digit consolidated revenue growth in FY27, supported by large program ramp-ups in H2FY27, sustained deal momentum and healthy pipeline conversion.

Growth is expected to remain broad-based across automotive and non-automotive businesses. Management highlighted that the pipeline continues to expand, with an increasing share of large, turnkey full-vehicle engagements providing greater revenue visibility.

They expect strong double-digit growth to sustain over the next several years, although maintaining +20% growth could become increasingly challenging as the business scales. Management believes capability development, infrastructure and AI investments would be key determinants of growth rather than demand availability.

Disclaimer: This article has been written by Veer Sharma, who is not a SEBI-registered Research Analyst or an Investment Adviser. Veer Sharma and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.