TATATECH - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.3
| Stock Code | TATATECH | Market Cap | 25,918 Cr. | Current Price | 639 ₹ | High / Low | 803 ₹ |
| Stock P/E | 37.5 | Book Value | 39.2 ₹ | Dividend Yield | 1.31 % | ROCE | 66.9 % |
| ROE | 58.6 % | Face Value | 2.00 ₹ | DMA 50 | 659 ₹ | DMA 200 | 707 ₹ |
| Chg in FII Hold | 0.26 % | Chg in DII Hold | 0.04 % | PAT Qtr | 135 Cr. | PAT Prev Qtr | 133 Cr. |
| RSI | 42.8 | MACD | -2.98 | Volume | 6,30,158 | Avg Vol 1Wk | 7,76,330 |
| Low price | 595 ₹ | High price | 803 ₹ | PEG Ratio | 0.66 | Debt to equity | 0.05 |
| 52w Index | 21.0 % | Qtr Profit Var | 30.8 % | EPS | 13.7 ₹ | Industry PE | 25.7 |
💰 Financials: Tata Technologies (TATATECH) demonstrates strong fundamentals with ROE at 58.6% and ROCE at 66.9%, reflecting exceptional efficiency in capital usage. Debt-to-equity ratio of 0.05 highlights a virtually debt-free balance sheet. Quarterly PAT improved to ₹135 Cr. from ₹133 Cr., showing steady earnings growth (+30.8% YoY). Cash flows remain robust, supported by engineering services, product development, and digital transformation projects.
📊 Valuation: Current P/E of 37.5 is above the industry average of 25.7, suggesting premium valuation. P/B ratio (~16.3) is high relative to book value of ₹39.2. PEG ratio of 0.66 indicates undervaluation relative to growth prospects. Intrinsic value analysis suggests the stock is fairly valued with potential upside if earnings momentum continues.
💻 Business Model & Competitive Advantage: Tata Technologies operates as a global engineering services and product development company, serving automotive, aerospace, and industrial clients. Its competitive advantage lies in strong domain expertise, Tata Group backing, and focus on digital engineering and EV solutions. The company benefits from rising demand for outsourced R&D and digital transformation, though growth is sensitive to client budgets and global cycles.
📈 Entry Zone: Considering DMA 50 (₹659) and DMA 200 (₹707), accumulation is attractive in the ₹600–₹630 range. Long-term investors can hold for compounding returns, supported by strong fundamentals and industry tailwinds.
Positive
- Exceptional ROE (58.6%) and ROCE (66.9%).
- Low debt-to-equity ratio (0.05) ensures financial stability.
- Steady quarterly PAT growth to ₹135 Cr.
- Strong domain expertise in automotive and aerospace engineering.
Limitation
- High P/E (37.5) compared to industry average (25.7).
- P/B ratio (~16.3) suggests expensive valuation.
- Profitability sensitive to global demand cycles and client budgets.
- Stock trading below DMA levels, reflecting weak short-term momentum.
Company Negative News
- Stock momentum weak with RSI at 42.8 and MACD negative (-2.98).
- High valuation may limit near-term upside.
Company Positive News
- Increase in FII holdings (+0.26%) and DII holdings (+0.04%).
- Strong quarterly profit growth supports investor sentiment.
Industry
- Engineering services industry P/E at 25.7 indicates Tata Technologies trades at a premium.
- Sector growth driven by digital transformation, EV adoption, and outsourced R&D.
- Global demand cycles and competition remain key risks.
Conclusion
🔑 Tata Technologies is a fundamentally strong company with exceptional return ratios, low debt, and diversified engineering services. While valuations are stretched, its growth prospects in digital engineering and EV solutions justify long-term holding. Entry around ₹600–₹630 offers a favorable risk-reward balance for investors seeking exposure to outsourced R&D and digital transformation opportunities.