ICICI Securities research report on Tata Elxsi
Tata Elxsi (TELX) has reported a muted Q4FY25 print with revenue contraction of 5.3% QoQ CC, roughly in line with our estimate (of -5.9%) and falling below consensus. Transportation vertical downturn was sharp, though already built into ISec’s estimate. Other highlights of Q4 include: 1) 3 large deals signed with higher annuity component, 2) a pivot towards emerging geographies 3) company highlighting growth bounce back in Q1FY26. Though new deals give some near-term respite, structural and macroeconomic issues loom large.
Outlook
We largely maintain our estimates and tweak FY26E EPS by 130bps on slightly better near-term visibility lent by large deals and optimism in healthcare-led demand. Recommend REDUCE (from Sell - on recent stock correction of 7% in last one month) set at an unchanged 1-year forward PE of 30x.
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