Emkay Financial Services - Tata Technologies IPO Note

The company’s growth trajectory remains slower than peers over FY16-23, but it has improved in the last 3 years on account of traction in select accounts. Weakness observed in a large client in H1FY24 due to near completion of the large full vehicle development projects may weigh on near-term performance and, in our view, IPO valuation has captured it adequately. At the upper end of the price band, Tata Tech is being valued at ~32x its FY23 EPS vs. its peers such as LTTS (~40x its FY23 EPS), Tata Elxsi (~69x its FY23 EPS), KPIT (~110x its FY23 EPS), and CYL (~37x its FY23 EPS).