Tata Tech shares slip over 8% in a month; should you 'Buy' for long term or 'sell-on-rise'?

Shares of Tata Technologies Ltd edged up 0.08 per cent on Monday to settle at Rs 598.20. At this closing level, the stock has declined 8.03 per cent in the past one month.

Elara Capital has retained its ‘Sell’ rating on Tata Tech while cutting the target price to Rs 490 from Rs 515 earlier, citing margin pressures and medium-term risks to auto services revenue despite near-term growth visibility.

In the December quarter (Q3), Elara said Tata Tech reported 1.2 per cent quarter-on-quarter (QoQ) revenue growth in US dollar terms and 2.3 per cent growth in constant currency (CC) terms, while revenue declined 2 per cent year-on-year (YoY) in dollar terms. In rupee terms, revenue rose 3.2 per cent sequentially and 3.7 per cent YoY, aided by rupee depreciation.

EBITDA margin fell 160 basis points (bps) QoQ to 14.1 per cent, impacted by annual wage revisions, a temporary revenue shortfall following a cybersecurity incident at Jaguar Land Rover (JLR), and integration-related costs.

Meanwhile, Kranthi Bathini, Equity Strategist at WealthMills Securities, noted that the stock has been an underperformer post its listing. “We need to wait and watch how the next couple of quarterly results pan out. Investors with a long-term view can start accumulating Tata Tech, given the kind of the company’s business growth prospects and strong pedigree. One can buy the stock in a staggered manner from a long-term perspective,” he added.

From a technical standpoint, support on the counter could be seen in the Rs 520–570 range.

Osho Krishan, Senior Analyst – Technical & Derivative Research at Angel One, said, “Tata Tech has plunged to record lows amid the selling pressure seen in the overall IT space. The counter has showcased a breakdown and the chart structure looks bleak. The immediate support is seen around the Rs 540-520 zone. On the flipside, a series of resistances are placed around Rs 600, followed by the Rs 630-640 zone. A cautious approach is prudent at present.”

Drumil Vithlani, Technical Analyst at Bonanza, said, “Tata Tech remains in a medium-term downtrend, trading below key moving averages and major resistance zones. The stock continues to form lower highs, indicating sustained selling pressure. Unless the price reclaims important resistance with strong volumes, the overall bias is likely to remain negative, with rallies expected to face selling pressure. Support will be at Rs 570 and resistance at Rs 630–645. View will be to use ‘Sell-on-rise’ strategy.”

According to AR Ramachandran, part-time Sebi-registered research analyst at Tips2trades, “Tata Tech’s stock is bearish and also slightly oversold on daily charts with next support at Rs 545. Investors should buy only if a daily close is above the resistance of Rs 614.75 for an expected upside target of Rs 673 in the near term.”

What should investors do?

While Elara Capital remains cautious and has retained a ‘Sell’ call, a market expert suggests staggered accumulation for long-term investors. However, some technical analysts largely advise a cautious stance, with one recommending a ‘sell-on-rise’ strategy unless the stock decisively moves above key resistance levels.