Accumulate Tata Elxsi; target of Rs 7901: Geojit Financial Services

Geojit Financial Services recommended accumulate rating on Tata Elxsi with a target price of Rs 7901 in its research report dated November 06, 2024.

Broker Research

November 06, 2024 / 14:53 IST

Accumulate

26 Aug, 2025 12:21

Volume

Todays L/H

Geojit Financial Services research report on Tata Elxsi

Tata Elxsi (TELX) is a leading provider of IT ER&D (engineering, research and development) services. TELX has capabilities across Automotive, Broadcast & Communications, and Healthcare industries. In Q2FY25, TELX reported an 8% YoY & 3.1% QoQ growth. The growth was aided by large deals in the transportation segment which grew by 4.4% QoQ in constant currency terms. However, the Media & Communication and Healthcare segments were impacted by a delay in the renewal of deals. Despite an increase in training expenses, EBITDA margin improved by 70bps to 27.9%, owing to reduction in third party contracts & operational efficiency. During Q2FY25, TELX won a landmark $50Mn multi year deal from a Global Automotive OEM in Europe, which includes multiple domains of automotive engineering. The growth from India & RoW continue to witness strong double digit growth. While the US contracted by 300bps QoQ in its revenue mix, largely due to a weakness in the Healthcare & Communication segment. Currently, we expect most of the slow down has been factored in the price and we expect recovery by the second half of the year on account of increase in US IT spending in healthcare.

Outlook

Hence we maintain our valuation at 48x FY26E EPS and recommend Accumulate rating with a target price of Rs.7,901 at CMP.

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