Shares of Tata Elxsi Ltd. were trading with gains of over 5% on Monday even after a disappointing March quarter performance that led analysts at multiple brokerage houses to lower their price targets and adopt a more cautious stance.
Global brokerage firm Morgan Stanley has maintained its ‘Underweight’ rating on Tata Elxsi and reduced its price target to ₹4,660, citing a Q4 miss despite already modest expectations.
The brokerage wrote in its note that the automotive segment may see some ramp-up in deals but media appears soft despite recent wins, and macroeconomic conditions remain unsupportive for the industry overall.
With weak exit revenues, Morgan Stanley warned that the earnings downgrade cycle may continue, and at current elevated valuations, the stock could remain an underperformer.
JPMorgan also reiterated its ‘Underweight’ rating and slashed its price target to ₹4,400.
The brokerage said that Tata Elxsi missed estimates on both revenue and margins for the third consecutive quarter. Revenue declined 5.3% QoQ in constant currency terms, driven by a 9.7% drop in the Automotive segment and a 6.3% decline in Media & Telecom. The only positive was Healthcare, which grew 3.5%.
However, JPMorgan pointed to two large deal wins as a potential silver lining – a €50 million deal with a European automotive OEM and a $100 million consolidation deal in Media and Telecom, both expected to ramp up from Q1FY26.
While these may help revive growth over the next few quarters, the brokerage still expects Tata Elxsi to report slower growth in FY26 compared to FY25 due to an uncertain demand environment. Consequently, it has cut its FY26–27 earnings estimates by 1–2%.
What could be driving the stock higher
– Management expects growth to return from Q1FY26.
– FY26 growth rate will be better than FY25.
– Revenue uptick will come from large deal wins.
– Firm announced $100 million and €50 million deals in media and comms and transportation verticals, respectively.
Out of the 14 analysts that have coverage on Tata Elxsi, 11 of them have a ‘Sell’ rating on the stock, one has a ‘Hold’, while two others have a ‘Buy’ recommendation.
Shares of Tata Elxsi Ltd. settled 0.69% lower on Thursday at ₹4,895. The stock is down about 30% so far in 2025.
Content retrieved from: https://www.cnbctv18.com/market/tata-elxsi-share-price-may-continue-to-underperform-on-high-valuations-say-analysts-after-q4-results-19591507.htm.
