Shares of Tata Elxsi, a mid-sized IT company, declined 3% on Friday, October 10, following a dip in the company’s second-quarter net profit and revenue, along with bearish analyst views on the counter.
Tata Elxsi share price hit the day’s low of ₹5406.45 in the stock market today, down 2.99% against its last closing price of ₹5573.15. As of 11.05 am, Tata Elxsi shares were trading 2.7% lower at ₹5423.90.
Tata Elxsi Q1 results
The Tata group company posted a muted set of numbers for the July-September period of the financial year 2025-26 (FY26), with a 32.5% year-on-year (YoY) decrease in its net profit to ₹154.8 crore.
It had reported a net profit of ₹229.4 crore in the year-ago period, according to a regulatory filing.
Meanwhile, its revenue from operations dropped 3.8% YoY to ₹918 crore in Q2 FY26 from ₹955 crore in Q2 FY25.
Tata Elxsi Shares: Buy, sell or hold?
While the revenue beat analyst expectations, they believe signs of structural recovery are yet to emerge.
“Revenue growth, in Q2, was led by the media vertical, while performance in auto and healthcare remains muted. Industry-wide challenges in media and communication are persisting; therefore, growth momentum is unlikely to sustain in H2 FY26,” opined analysts at ICICI Securities.
Management expects H2 revenue growth to outpace H1, but the brokerage believes a significant recovery may not take shape, considering seasonal weakness in Q3. It maintained a ‘sell’ rating on Tata Elxsi stock, with a lower target price of ₹4,230 (as against ₹4,420).
Another brokerage, Elara Capital, also believes recovery is distant as Tata Elxsi operates in a high operating leverage business (higher offshore employee base versus peers), due to which margins may drop in FY26E on weak revenues before recovering in FY27E/28E.
“We factor in 5.1% earnings CAGR in FY25-28E. The multiple has already moderated from the peak of 80x to 48.8X one-year forward. Given muted revenue and earnings growth outlook, this multiple is likely to be challenged, in our view,” it said.
It also maintained a ‘sell’ rating, with Tata Elxsi share price target of ₹4,390, based on 30x FY28E P/E. Material improvement in client spend and subsequent improvement in financials are key risks to our call, it added.
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