Tata Elxsi Q2 Results Review - Non-Auto Portfolio Drags Growth: ICICI Securities

ICICI Securities Report

Tata Elxsi Ltd. reported muted growth of 0.2% QoQ constant currency in Q2 FY25. While the auto vertical continues to grow at a healthy pace, challenges persist in communication and healthcare.

Given softer growth in H1 FY25, at ~6.5% YoY CC, management’s earlier guidance of double-digit CC growth in FY25 requires ~7% CQGR in H2 FY25, seems a tall ask.

We model 7.9%/15.1%/14.8% YoY CC revenue growth in FY25E/26E/27E. We expect Ebitda margin to remain range-bound at ~29–30% and has downside risk if growth moderates further.

We value Tata Elxsi at a five-year average multiple of 49 times on Q2 FY26E–Q1 FY27E earnings per share of Rs 158 and arrive at a target price of Rs 7,590 with potential 2% downside.

We like the company given its presence in high growth service lines of design, embedded and digital engineering, diversified vertical exposure and superior margins.

We assign Hold rating given premium valuations on backdrop of moderating growth.

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.