Sell Tata Elxsi; target of Rs 4965: Deven Choksey

Deven Choksey's research report on Tata Elxsi

Tata Elxsi’s Q1FY26 revenue stood at INR 8,921 Mn. (-1.8% QoQ/ -3.7% YoY), below our estimates by 5.5%, led by broad-based weakness across verticals. Further, it reported revenue decline of 3.9% QoQ CC (-9.0% YoY CC), led by macroeconomic headwinds, coupled with industry-specific and client-side challenges that weighed on R&D budgets and decision-making cycles across key markets.

Outlook

We value Tata Elxsi at a 38.0x Jun’27 EPS, implying a target price of INR 4,965, as we roll forward our valuation to Q1FY28E. We downgrade our rating from “HOLD” to “SELL” as we adopt a cautious outlook until clearer evidence of sustainable growth and profitability improvement emerges.