DBT Bureau
Bengaluru, 19 July 2024
The decline in services revenue pulled down Tata Technologies’ net profit by 15% to Rs 162 crore in the first quarter of the current financial year.
Its revenue grew 0.9% year-on-year to Rs 1,269 crore ($152.1 million) during this period. Services segment, which constituted 78% of total revenue stood at $118.1 million, down 1.3% sequentially.
However, the management highlighted that the impact of project rampdowns from a key customer, VinFast is now behind and the company would see its services business grow in the coming quarters.
“The VinFast transition is now largely behind us, and we fully expect the sequential revenue growth of our services business to accelerate from the current quarter. Confidence in our full-year prospects is fuelled by our order book, continued positive momentum within our anchor accounts, and tailwinds that we expect to continue to intersect with across automotive, aerospace, and industrial heavy machinery,” Warren Harris, CEO of Tata Technologies said.
Brokerages have highlighted the client concentration risk that the Pune-headquartered company is facing owing to its reliance on the Vietnamese electric vehicle maker- VinFast. The company is currently diversifying its client base to reduce such dependence.
During the quarter, the company won five strategic deals across automotive and aerospace segments.
Its operating margin stood at 18.2%, down 20 basis points from the last quarter.
Engineering services companies have so far reported a mixed set of Q1 results after last fiscal’s good run. While Persistent Systems reported a 5.6% sequential rise in its revenue, Tata Elxsi’s top line grew 2.4% during the first quarter.
L&T Technology Services’ sequential revenue declined 3.3% and HCL Tech’s engineering services segment saw a 3.7% decline in its top line. Seasonality and client-specific issues have impacted the top-line growth of Indian engineering services firms during this quarter.
