Tata Elxsi Ltd. posted a mixed set of numbers for the second quarter result for financial year 2027, with operating profitability and revenue improving but net profit remaining subdued.
JPMorgan has reduced the company's price target to Rs 3,200 from Rs 3,400, implying an over 6% downside from its last closing price of Rs 3426.40, while Motilal Oswal has maintained a 'sell' rating on the stock with a price target that implies 13% downside at Rs 2,970.
Both brokerages noted that the margin recovery to fourth quarter levels is happening on a slower pace than expected.
"Incrementally from here, it (Tata Elxsi) expects margins to expand gradually over the next few quarters, indicating it will take longer to get back to 4Q26 margins levels of 22.3%," said JPMorgan in its review note.
At the same time it noted that the second quarter print beat on both revenue and margins. Revenues grew 2.3% in constant currency terms sequentially, and was broad based across verticals helped by large deal ramp ups and new deal wins.
"The positive surprise on growth came from deal wins in Auto in the US and India even as EU Auto remains under pressure," the brokerage highlighted, adding that the higher base in second half of FY26 means second half growth in FY27 should be lower than the first half, accounting for the uncertainty in EU Auto.
MOSL stated that while the deal pipeline provides visibility, conversion and ramp-up remain key monitorable. It also underlined that the demand remains selective, with growth dependent on execution across verticals rather than a broad-based spending recovery.
"Multi-year engagements and a pipeline of opportunities across existing and emerging verticals provide revenue visibility. Aerospace and defense opportunities are progressing, although their near-term revenue contribution is likely to remain modest," the brokerage said.
Tata Elxsi Q2FY27
Tata Elxsi reported a mixed performance for the September quarter of FY27, with revenue and operating profitability improving sequentially while net profit remained largely unchanged.
The company's net profit stood at Rs 170.3 crore in Q2 FY27, marginally lower than Rs 170.6 crore in the June quarter, marking a 0.2% decline quarter-on-quarter (QoQ).
Revenue increased 3.4% QoQ to Rs 1,056 crore from Rs 1,021 crore in Q1 FY27. The growth reflected an improvement in the company's topline performance during the quarter.
Operating performance strengthened further, with earnings before interest and tax (EBIT) rising 7.3% sequentially to Rs 207.8 crore from Rs 193.7 crore in the previous quarter.
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