Tata Group’s manufacturing services arm Tata Technologies (Tata Tech) on Thursday recorded a 15.4% year-on-year decline in quarterly net profit, weighed down by increase in expenses incurred for purchase of technology solutions.
Net profit for the June quarter stood at INR 162.03 crore compared with INR 191.55 crore a year ago, the Pune-headquartered company said on Thursday. Sequentially, net profit increased by 3.04%.
Revenue from operations for the quarter stood at INR 1,269 crore, up 0.9% from a year ago but down 2.5% sequentially.
The management highlighted that the impact of losing key customer VinFast is behind, and the company is back on track to accelerate its services business.
“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,” Warren Harris, chief executive officer and managing director of Tata Tech, said in a statement.
The Vietnamese electric vehicle maker was heavily weighing down on Tata Tech’s revenue and brokerages had cut their growth forecasts highlighting client concentration risk.
“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,” Harris said.
Among major deal wins during the quarter, Tata Tech said it has been selected by a global EV battery manufacturer for battery design, by a leading commercial vehicle original equipment manufacturer (OEM), by a North American commercial vehicle manufacturer, and it has also signed a multi-year engagement with a European tier-1 aerospace company.
The Q4 business was weighed down by a 7.4% sequential decrease in revenue in the technology solutions segment, which constitutes a third of its total revenue. However, the services segment, which accounts for the rest, remained almost constant, marking a marginal decline of 1% quarter-on-quarter. Besides, employee expenses and cost for purchase of technology solutions increased for the quarter and added to the profit woes of the company.
The company’s results were announced after market hours.
On Thursday, shares of Tata Tech closed 0.64% lower on the BSE at INR 1,009.25.
A subsidiary of Tata Motors, the company was listed on the stock exchanges in November last year. Since then, its shares have dipped by more than 17% on the BSE.
