Tata Elxsi Q2 profit rises 10% as shares jump; brokerages keep cautious targets

Tata Elxsi delivered a sequential recovery in Q2 FY27, with revenue growing 2.3% QoQ and 7.8% YoY on a CC basis, supported by broad-based growth across its key verticals, adds the brokerage.

Tata Elxsi Ltd. reported a 7.2% advance in net profit for the second quarter of fiscal 2026, thereby meeting analysts' estimates. The jump in bottom-line came on the back of growth in overseas business.

Tata Elxsi shares rallied as much as 7% to a day high of Rs 3,657 on the BSE on Wednesday after reporting a 10% year-on-year (YoY) rise in net profit for the September quarter. Double-digit revenue growth helped, even as higher employee and operating costs kept profit growth below top-line expansion.The company’s net profit for the quarter ended September 2026 stood at Rs 170 crore, compared with Rs 155 crore in the same period last year.Revenue from operations rose 15% YoY to Rs 1,056 crore from Rs 918 crore a year earlier. Total income, including other income, gained 13% to Rs 1,090 crore, compared to Rs 967 crore a year earlier. Other income fell to Rs 35 crore from Rs 49 crore, partly weighing on the overall profit growth.Buy, sell or hold Tata Elxsi shares?Morgan Stanley maintained its Underweight rating on Tata Elxsi with an unchanged target price of Rs 3,400. Revenue and margins beat expectations, with constant currency revenue growth at 2.3% QoQ versus the estimated 1.6%. EBIT exceeded estimates by 3.4% and consensus by 4%, while PAT missed consensus due to a higher tax rate.Management expects the third quarter to be seasonally soft, with margin improvement remaining calibrated at 170 basis points over two quarters. The brokerage raised its earnings per share estimates by 1.9% for FY28 and 1.6% for FY29. However, valuations remain rich and could cool unless the company sustains its growth momentum.Motilal Oswal has reiterated a Sell rating with a target price of Rs 2,970, implying a 13% downside from current levels. The brokerage expects growth in 2HFY27 to be better than in 1HFY27 on a YoY basis. However, a sustained acceleration will depend on converting deal wins into revenue, as new engagements typically take 2-3 quarters to ramp up.The brokerage expects recently closed deals to make a larger contribution in FY28 and estimates 8.2% YoY constant currency (CC) growth for the year. European automotive demand is likely to remain a key constraint, with subdued demand, cautious customer spending and delayed decision-making weighing on automotive engineering spending and deal closures. The US and India are expected to remain relatively supportive, while growth in other verticals and geographies should partly offset continued weakness in Europe.JM Financial maintains a Reduce call with a higher target of Rs 3,358 (2% downside) even as it expects H2FY27 revenue to exceed H1FY27, supported by automotive ramp-ups in the US and India, continued momentum in Media & Communications, and a recovery in Healthcare.However, decision-making among European OEMs remains slow. Headcount declined 1.6% QoQ but rose 6.7% YoY. Revenue leakages have also reduced compared with a year ago, supported by large multi-year automotive and media deals and lower exposure to project run-offs as the company shifts from automotive suppliers to OEMs. Q3 has fewer working days, although the extent of furloughs remains uncertain, while engineering deals typically take two to three quarters to scale.Disclaimer: This article has been written by Veer Sharma, who is not a SEBI-registered Research Analyst or an Investment Adviser. Veer Sharma and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.

Tata Elxsi reported a marginal decline in Q2 net profit to Rs 170.3 crore, while revenue grew 3.4% QoQ to Rs 1,056 crore. EBIT rose 7.3%, and the operating margin expanded to 19.7%. Shares gained 5.21% on October 13.

Mumbai: Tata Elxsi Limited reported a 10 percent year-on-year increase in net profit to Rs 170.30 crore for the second quarter of FY27, compared with Rs 154.82 crore in the corresponding quarter of the previous financial year. Revenue from operations rose 15 percent to Rs 1,055.66 crore from Rs 918.10 crore, according to the company's audited financial results filed with the stock exchanges on Tuesday.Q2 FY27 Financial PerformanceThe company's total income increased to Rs 1,090.57 crore during the July-September quarter, compared with Rs 966.98 crore a year earlier.Total expenses rose to Rs 851.47 crore from Rs 752.26 crore in the corresponding quarter last year.Profit before tax increased 11 percent to Rs 239.10 crore from Rs 214.72 crore. Total tax expense stood at Rs 68.80 crore, compared with Rs 59.90 crore a year ago.Basic and diluted earnings per share increased to Rs 27.34 from Rs 24.85.Sequential PerformanceOn a quarter-on-quarter basis, revenue from operations increased 3.4 percent from Rs 1,021.11 crore in Q1 FY27. Tata Power Renewables Reports 130% YoY Growth In Q2 FY27 Utility-Scale ExecutionHowever, net profit declined marginally by 0.2 percent from Rs 170.60 crore in the June quarter to Rs 170.30 crore in September.Profit before tax increased 2.9 percent from Rs 232.46 crore, while total expenses rose 2.6 percent from Rs 830.11 crore.Half-Year PerformanceFor the six months ended September 30, 2026, Tata Elxsi reported revenue from operations of Rs 2,076.76 crore, an increase of 15 percent from Rs 1,810.20 crore in the corresponding period last year.Net profit increased 14 percent to Rs 340.90 crore from Rs 299.19 crore.Profit before tax rose to Rs 471.55 crore from Rs 411.06 crore, while total expenses increased to Rs 1,681.58 crore from Rs 1,486.48 crore.Segment Performance And Auditor's ReportThe software development and services segment recorded quarterly revenue of Rs 1,027.87 crore, compared with Rs 893.82 crore a year earlier.Revenue from system integration and support services increased to Rs 27.79 crore from Rs 24.28 crore. Long-Term Chip Investments Crucial For India's Future: Tata Sons Chairman ChandrasekaranThe company reported no exceptional items during Q2 FY27. Its statutory auditors, B S R & Co. LLP, issued an unmodified opinion on the financial results.Disclaimer: This report is based on audited financial results filed by the company and does not constitute investment advice.