Reduce Tata Elxsi, target of Rs 6185: Sharekhan

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26 Aug, 2025 12:21

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Sharekhan's research report on Tata Elxsi

Tata Elxsi Limited’s Q3FY23 revenue increased by 3.5% q-o-q/29% y-o-y in cc but missed our estimates of 4.1% q-o-q in cc. Revenues was impacted by furloughs and lower working days. Sequential CC revenue growth continued to moderate to 3.5% from 4.7% in Q2FY23. EBITDA margin for the quarter improved by 50 bps q-o-q to 30.2%. Utilization of billable employees and INR depreciation provided tailwinds for margin improvement. Management indicated that while demand outlook for Media & communications and Healthcare & Medical devices would be soft, they are more optimistic on Healthcare & Medical Devices to recover faster. On the demand outlook Management stated among Top 10 clients they are seeing some large deals not moving forward and seeing caution in the market. Clients prefer to adopt wait and watch policy. The company stated that it will take a couple of quarters before they get some clarity.

Outlook

We expect the outlook for FY24 to be uncertain on account of global headwinds and any recovery is most likely to be gradual. Given the continuing macro uncertainties and tapering of earning growth trajectory for Tata Elxsi, we maintain Reduce rating and revise our PT to Rs. 6,185. We advise investors to wait for a better entry point for long-term investment.

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Tata Elxsi - 27 -01-2023 - khan