Stock Tips: Money may be stuck in these two shares of Tata, betting on KPIT Tech

New Delhi. Brokerage firm Motilal Oswal has released its report on three companies of engineering, research and development (ER & D) sector. Brokerage has advised to sell shares of Tata Group companies Tata Technologies and Tata Elxy, while KPIT has asked to buy technologies stock.

Motilal Oswal says that while KPIT technologies are a strong investment opportunity for a long period, the balance of the rescue-worker for Tata Technologies and Tata Alxy is not currently attractive, so there is only benefit in selling both these shares.

Brokerage says that more than 80% of the company’s income embedded software, E/E (Electrical/Electronic) Architecture and Middleware Consulting. The company has strong relationships with over 25 OEM and Tier-1 suppliers, which is in a good position to take advantage of the growing software complications. Kpit’s income FY20 is expected to reach $ 691 million in FY25 to $ 691 million (18% CAGR) and FY28 to reach $ 1 billion by FY28.

‘Sell’ rating on Tata Technologies

Motilal Oswal has given a ‘Sell’ rating by keeping a price target of ₹ 580 for Tata Technologies. Brokerage says that the company’s margin profile is weak because its focus is on more mechanical engineering. Motilal Oswal retained his ‘SELL’ rating on Tata Alxy and has fixed its target price ₹ 4,600.

Brokerage says that due to slow growth in healthcare and media verticals in Europe, pressure may remain in the near future. Margin recovery is expected to be limited and Ebit margin is estimated to return to 21.1% by FY26, while earlier it used to go up to 27–28%.

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