Tata Elxsi Ltd. is likely to remain in focus after its June-quarter earnings prompted brokerages to lower their target prices, even as the company reported higher revenue. Analysts said revenue exceeded expectations, but margin pressure and weaker profitability offset the gain.
Tata Elxsi Q1 Results (Consolidated, QoQ)
- Net profit down 22.6% to Rs 171 crore from Rs 220 crore
- Revenue up 2.8% to Rs 1,021 crore from Rs 994 crore
- EBIT down 12.4% to Rs 193.8 crore from Rs 221.3 crore
- EBIT margin:19.0% vs 22.3% (down 330 basis points)
Brokerages said the quarter reflected continued pressure on profitability despite growth in revenue. They attributed the margin decline to investments, deal-related costs and weakness in key business segments, while lowering earnings estimates and target prices.
Here's what analysts are saying after Tata Elxsi announced Q1 results
JPMorgan
- Maintained 'Neutral'; Cut target price to Rs 3500 from Rs 3600
- Q1 print mixed; Beat on revenues but margins missed sharply
- Continues to aim for HSD growth in FY27
- Margin weak due to large deal transition, rampup costs, onsite delivery investments, talent investment, customer related costs, provisions, and one time annual costs
- Some of these costs will go away over next 1-2 quarters
- Cut earnings by 1-13% mainly driven by 7-330bps margin cuts over FY27-29
Kotak Securities
- Maintained 'Sell'; Cut target price to Rs 3000 from Rs 3800
- Growth struggles; profitability resets
- Another muted quarter due to sustained weakness in automotive
- Retains high single-digit growth outlook for FY27E
- Recent large deals and investments weigh on profitability
- Margin reset drives 10-14% earnings cuts for FY27-29
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