JP Morgan, a prominent brokerage firm, expresses bullish sentiment towards engineering, research, and development (ER&D) companies due to their relatively resilient growth trajectory.
Amidst strong growth compared to IT firms, JP Morgan considers CY24 a year of recovery for ER&D companies, with a substantial total addressable market that continues to remain attractive and supportive of momentum.
Initiating coverage on Cyient, the firm assigns an “overweight” rating with a target price of Rs 2,600, indicating a potential upside of approximately 31% from the closing price on March 19. JP Morgan highlights Cyient’s robust demand across the majority of its portfolio.
Conversely, JP Morgan initiates coverage on Tata Technologies with an “underweight” rating and a price target of Rs 800, implying a downside of 23%.
JP Morgan notes that Tata Technologies faces challenges associated with high client concentration and scaling non-anchor clients.
In terms of preference among ER&D companies, JP Morgan ranks Cyient, LTTS, Persistent, KPIT Tech, and Tata Elxsi ahead of Tata Technologies.
Following the news, Cyient shares surged by nearly 4% to reach Rs 2,053.65 intraday, while Tata Technologies witnessed a decline to Rs 1,031.5, down approximately 1% from the previous close.
In the quarter ended December 2023, Tata Technologies recorded a 14.7% year-on-year growth in consolidated profit, amounting to Rs 170.22 crore. Conversely, Cyient reported a 17.4% sequential decline in consolidated profit for the third quarter of FY24, attributed to tepid topline growth and a higher exceptional loss.
Disclaimer: The opinions and investment advice provided by JP Morgan and other experts mentioned in this report are their own and do not necessarily reflect the views of LegalParivar.com or its management. It is advisable for investors to consult certified experts before making any investment decisions.
