Shares of Tata Elxsi slipped as much as 7 percent to Rs 5,660 in morning trade on Friday, July 11, after the company reported a sharp drop in June quarter earnings, triggering concerns over demand headwinds and margin pressure. The disappointing performance also prompted global brokerages to cut estimates and maintain bearish views on the stock.
Morgan Stanley retained its Underweight rating with a target price of Rs 4,660, implying a downside potential of 24 percent from the last close on the NSE. The brokerage said the company missed expectations despite low investor forecasts. While management remained hopeful of a recovery led by auto and media verticals, analysts flagged that the stock has outperformed peers despite an ongoing earnings downgrade cycle.
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JPMorgan also reiterated an Underweight call, lowering its target to Rs 3,800. It highlighted that this was the fourth consecutive quarter of revenue and margin miss. The brokerage expects auto deal ramp-ups to be gradual and flagged lingering tariff-related uncertainty in the US market. It expects telecom to return to growth from Q2 but trimmed FY26–28 earnings estimates by 3–5 percent.
Tata Elxsi posted a 22 percent year-on-year decline in net profit at Rs 144 crore for Q1FY26, compared to Rs 184 crore a year ago. Revenue fell 3.7 percent to Rs 892 crore, dragged by weakness in the automotive and transportation segment, which makes up over half its top line. EBITDA dropped 26 percent year-on-year to Rs 187 crore.
CEO Manoj Raghavan said the quarter was marked by macro and client-specific challenges, impacting R&D spend and slowing decision cycles. Despite this, he said the company remains focused on large deal execution and building long-term customer relationships.
At about 9:30 am, shares of the company were trading at Rs 5,880, lower by 4.4 percent from the last close on the NSE. Tata Elxsi shares are down nearly 10 percent since the beginning of the year.
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