Tata Elxsi offers a strong long-term investment opportunity across its key verticals, despite current macroeconomic headwinds. The transportation segment is showing recovery signs, particularly with the stabilization of the JLR account and strategic wins, with OEMs such as Mercedes-Benz, Suzuki, and a European player, including a $50 million deal.
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HDFC Securities Institutional Equities
With strong client relationships, differentiated capabilities, and strategic positioning across verticals, Tata Elxsi Ltd. is well-placed for sustained growth.
We have increased our revenue estimate by 1–2%, driven by improved growth visibility. However, margin recovery is expected to be gradual, leading to a 1–3% reduction in our EPS estimate.
We expect Tata Elxsi to deliver revenue/EPS CAGR of 10/12% over FY25-28E vs five year CAGR of 14/24%.
We upgrade Tata Elxsi to Add (earlier Reduce) with a revised P/E multiple to 35x (~32x earlier) and a target price of Rs 5,700, based on 35x Sep-27E EPS.
The stock is trading at a P/E of 36/31x FY27/28E (10 year average at 36 times).
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