Tata Technologies’ share price was volatile on Wednesday as a major brokerage firm initiated coverage on the stock.

What Happened: JP Morgan initiated coverage on the Tata Group company with an “underperform” rating for the stock with a price target of ₹800. The target indicates an around 23% downside from the stock’s last closing price of ₹1,042.50. The target is however still much ahead of the company’s IPO issue price of ₹500.

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The global brokerage firm said that despite the engineering research and development (ER&D) sector shining brightly, the Tata Motors‘ subsidiary faces challenges such as high client concentration and limited evidence of successfully scaling non-anchor clients.

The analysts expect a lower earnings compound annual growth rate (CAGR) of 16% over FY24-26 compared to the peer average of 18%. The analysts also think that the company’s valuations appear to be excessive, standing at 53 times the one-year forward price-to-earnings ratio (P/E).

Price Action: Tata Tech’s share price was down 0.38% to trade at ₹1,038.05 as the markets opened on Wednesday.

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