Sell Tata Elxsi; target of Rs 4120: Choice Equity Broking

Choice Equity Broking's report on Tata Elxsi

TELX reported an in-line performance for Q2FY26 with modest sequential recovery and early signs of operational stabilisation. While near-term challenges persist in Automotive and Media & Communications, H2FY26 growth visibility has improved on the back of large Transportation deal ramp-ups and a strong Healthcare pipeline. Margins are expected to recover gradually with higher utilization and operational efficiencies.

Outlook

We maintain our PE multiple at 28x, arriving at a Target Price of INR 4,120 based on average FY27E–FY28E EPS of 147.3. We reiterate our SELL rating, while noting that sustained doubledigit growth momentum in the Transportation & HLS vertical, margin expansion, and improved deal wins in Media & Communications could act as potential re-rating triggers.