India's Tata Technologies posts Q1 profit fall on declining services revenue, higher expenses

Tata Technologies

18/07/2024 12:28

BENGALURU, July 18 (Reuters) - India's Tata Technologies
 TATE.NS  reported a 15% fall in first-quarter profit on
Thursday, hurt by declining revenue from its services segment
and higher expenses. 
    The company, which provides engineering and technology
services to auto, aero and heavy machinery makers, said its
consolidated net profit after tax declined to 1.62 billion
rupees (around $19 million) in the quarter ended June 30 from
1.92 billion rupees earlier.
    Analysts' notes point towards a heavy dependence on client
orders, including from major ones such as parent Tata Motors -
which dominates India's small but growing EV market - and
Vietnamese EV company VinFast  0TL.F .
    Revenue from VinFast, however, declined in the preceding
quarters, with analysts saying the effects of the cut would have
"bottomed out" in the April-June quarter.
    Tata Technologies' profit fell 27% in the quarter ended
March 31 due to similar reasons.
    Revenue from its services segment fell 0.5% in the quarter,
while its smaller technology solutions segment's revenue grew
6%.
    Overall revenue for the June quarter rose just 0.3%, and,
together with a 12% rise in expenses, hit the company's
bottomline. 
    While the company did not provide a breakdown of the revenue
decline from VinFast, CEO and Managing Director Warren Harris
said in a statement that the VinFast transition is now largely
behind and added he expects the sequential revenue growth in the
services business to accelerate from the current quarter.
    The June quarter marks the third quarterly earnings for the
Tata Motors  TAMO.NS  unit, which went public in a smashing
debut in November at a valuation of $6.4 billion.


($1 = 83.6130 Indian rupees)

 (Reporting by Manvi Pant in Bengaluru; Editing by Janane
Venkatraman
)
 ((Manvi.Pant@thomsonreuters.com; +918447554364;))