Goldman Sachs has initiated coverage on Tata Technologies with a 'Sell' call with a target price of Rs 900, citing concerns that could impact company’s performance.
The target price set by Goldman Sachs indicates a 12 percent downside from the current market price of Tata Tech. On June 19, Tata Tech's shares closed marginally lower at Rs 1,029, marking the fifth consecutive session of decline.
Over the past six months, Tata Tech shares have declined by more than 14 percent, underperforming the Nifty 50, which gained 11 percent during the same period.
Goldman Sachs fears that revenue projection from one of Tata Tech's major customers, VinFast, is expected to decline in the near term.
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Tata Tech has shown a higher dependence on its anchor customers compared to its peers and this reliance could affect the company's revenue stability, Goldman Sachs said, making it more vulnerable to changes in dynamics of its clients.
Goldman Sachs has added that there may be better entry points ahead for investors.
The Goldman Sach's report also highlighted that long-term research and development (R&D) spending in the emerging aerospace segment has been subdued over the past cycles.
A moderate growth rate is expected to drive stable free cash flow (FCF) growth, said Goldman Sachs in a note.
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