Tata Elxsi Rated 'Sell' By Motilal Oswal After Q3 Results — Here's Why

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. 

Motilal Oswal Report

While Q3 execution improved, Tata Elxsi Ltd.’s growth remains uneven and largely reliant on transportation-led ramp-ups, with media and healthcare continuing to lag amid cautious client spending.

With demand recovery still selective rather than broad-based, Motilal Oswal expects a modest ~6% CAGR in USD revenue over FY25-28.

The brokerage maintaints its FY27 estimates unchanged but raise FY26/FY28 by 3%/1%, reflecting stronger-than-expected Q3 execution and better near-term visibility in the transportation vertical. However, margin expansion is expected to be gradual and back-ended, with Ebit margins improving to 22.4%. This translates into an EPS CAGR of ~7.5% over FY25-28.

Valuations remain steep at ~43x 12-month forward P/E, which the brokerage views as difficult to justify given the lack of sustainable cross-vertical growth visibility.

Hence the brokerage values the stock at 30 times FY28E EPS, with a target price of Rs 4,700 and maintain Sell rating.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit. 

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.