Synopsis: Tata Technologies’ stock jumped over 4% today even though its Q3 profit dropped by 96%. However, the hit came from one-time hits like new labour rules and acquisition expenses, which weighed down its profitability.
The shares of this leading Tata group company, engaged in offering Product Development and Digital Solutions, are in focus after reporting a sharp decline in net profit. In this article, we will dive more into the details of it.
With a market capitalisation of Rs 27,294 crore, the shares of Tata Technologies Ltd made a day high of Rs 679 per share, up 4.4 percent from its previous day’s closing price of Rs 650.40 per share. In the last one year, the stock has corrected by over 17 percent as compared to NIFTY 50’s positive return of 9 percent.
Q3 Highlights
The revenue from operations for Tata Technologies stands at Rs 1,366 crores in Q3 FY26 compared to Q3 FY25 revenue of Rs 1,317 crores, up by 4 per cent YoY. Additionally, on a QoQ basis, it reported a growth of 3 percent from Rs 1,323 crore.
Coming down to its profitability, the company’s net profit stood at Rs 6.64 crore in Q3 FY26, down from Rs 168.64 crore in Q3 FY25, which is a staggering decline of 96 percent YoY. Also, on a QoQ basis, it reported a drop of 96 percent from Rs 165.50 crore.
Coming to its revenue segmentation, the company reported Rs 1,060 crore of sales from its Services segment, which grew by 5 percent YoY from Rs 1,013 crore. And, it derived the remaining Rs 306 crore from its Technology Solutions segment, which grew by 0.3 percent YoY from Rs 305 crore.
The company’s profit fell sharply mainly because it booked one-time “Exceptional Items” worth around Rs 163.86 crore, which hurt earnings for the quarter. This included Rs 139.87 crore as the statutory impact of India’s new Labour Codes (notified on Nov 21, 2025). Basically, due to a change in wage definition, the company had to increase employee benefit costs like gratuity (Rs 114 crore) and leave/compensated absences (Rs 25.87 crore).
In addition, it also booked Rs 23.99 crore as acquisition-related costs after completing the 100 percent acquisition of Germany-based Es-Tee GmbH (via Tata Technologies Pte Ltd, Singapore), which provides high-end automotive engineering services in areas like ADAS (advanced driver assistance), connected driving and digital engineering. Since these expenses are non-recurring, they pulled down the reported profit significantly.
Naturally, these non-recurring costs were responsible for the drop in reported profit during the quarter because they are not part of the ongoing ordinary earnings of the Company.
Now, the other reason behind the rally in the share price today can also be attributed to positive comments from the management. The CEO pointed out that the third quarter demonstrated the company’s strength despite temporary problems and a seasonally slow quarter. Behind robust performances across the segments of the business, six big deal wins, and continued investment in delivery capacity, the company is confident that it is now ready for a sharp bounce back in the fourth quarter, with over 10 percent sequential revenue growth expected, which means the next quarter should be significantly better than the third quarter.
A major driver of this positive outlook is the ES-Tec acquisition. Executives anticipate that the buyout will start paying off quickly, with the company estimating around 4-5 percent of revenue contribution coming from ES-Tec in Q4 and FY27. They also indicated that the ES-Tec integration is progressing well and is already resulting in new joint business opportunities, thus assisting the company in constructing a broader and more stable growth engine.
The management further shed light on the fact that part of the Q3 pressure came from a one-time hit of around $3 million (Rs 27 crore), which was a result of a cyber attack on a large client. Looking ahead, the team expects the momentum experienced in Q4 to be carried through to FY27, with revenue going up by a double-digit figure in FY27 and margins probably increasing as well, since the Q3 margin headwinds are now behind them.
Tata Technologies Ltd, part of the Tata Motors group, works with big auto and aerospace companies around the world, helping them design and build vehicles with cutting-edge engineering and digital tools. They get involved in everything from electric vehicles and software-driven cars to connected tech, testing, smart manufacturing, and digital transformation.
Basically, Tata Tech is like the go-to engineering partner for original equipment manufacturers, guiding them from product design all the way to making the whole manufacturing process better. You’ll find their teams working with clients in India, the UK, North America, and across Europe.
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