Tata Elxsi, Tata Tech shares jump up to 10% after JPMorgan upgrade

Tata Elxsi, Tata Tech shares jump up to 9.5% after JPMorgan upgrade

• Tata Elxsi, Tata Tech shares surged after JPMorgan upgrade
• JPMorgan raised Tata Elxsi's target to Rs 4,800 and Tata Tech's to Rs 710.
• KPIT Technologies remains JPMorgan's top sector pick with an "Overweight" rating

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Shares of Indian software engineering firms Tata Technologies and Tata Elxsi jumped 4.5% and 10%, respectively, on January 7 after JPMorgan upgraded both stocks.

JPMorgan upgraded both Tata group stocks to "Neutral" from "Underweight" as automaker clients resume R&D programs after trade deals ease tariff uncertainties.

Work on projects won in 2025 to ramp up this year, the global brokerage said, with Europe, APAC clients leading demand recovery.

Auto investments focused on hybrids, brokerage notes, with EVs set to recover in the medium term, said JPMorgan.

As demand recovers, brokerage lifted price targets for the companies by 20-25%. JPMorgan lifted price target on Tata Technologies to Rs 710 from Rs 570 and Tata Elxsi's price target has been raised to Rs 4,800 from Rs 4,000.

However, KPIT Technologies remains JPMorgan's top pick in the sector and gave it "Overweight" rating with a target price of Rs 1,400. The stock was trading 5.5% higher at Rs 1,204 apiece on January 7.

The brokerage said that demand conditions in auto engineering research and development improved over the past three months.

Tata Elxsi, Tata Technologies had underperformed Nifty IT index in 2025 on demand worries.

At 2:50 pm on January 7, Tata Elxsi shares were trading 10% higher at Rs 5,876 apiece while Tata Technologies stock climbed 5.3% to Rs 683.7.

In 2025, Tata Technologies dropped 28%, Tata Elxsi was down 23% and KPIT Technologies fell 20% as against IT index's 13% fall.

Nifty IT is the top sectoral gainer on January 7 despite markets being in red with mid-cap IT firms like Persistent Systems, OFSS, Coforge leading the gains. At 2:30 pm on January 7, Nifty IT index was trading 1.7% higher at 38,618.

JPMorgan has upgraded Tata Elxsi's revenue estimates for financial year 2026-2028 by 1%-4% and margins by 10 to 100 basis points, driving a 1%-8% earnings per share (EPS) upgrades.

The revenue upgrades are driven by improving ER&D demand, especially in the EU, which is the company's biggest market, the brokerage said.