Tata Elxsi

Tata Elxsi reported operating revenue of INR 918.1 crores for Q2 FY26, representing 2.9% growth in actual currencies and 1% in constant currencies quarter-on-quarter. The company achieved EBITDA of INR 193.3 crores with a 21.1% margin and PBT of INR 214.7 crores at 22.2% margin. The US market grew 7.9% quarter-on-quarter, while the Media & Communication business showed 6.8% sequential growth driven by large deal ramp-ups. The transportation business, accounting for over 53% of revenues, registered 0.7% growth and opened a second engineering center with Suzuki focusing on cloud hardware and simulation. Healthcare and Life Sciences declined 2.3% due to conclusion of large regulatory programs, while system integration business grew 20.5%. The company launched a Dedicated Technology Center for Bayer devices and received an award from Dell Technologies. Management expects H2 to perform better than H1, with double-digit growth targeted for transportation and healthcare businesses in FY27. A cybersecurity incident at a top automotive client impacted project starts in September, though the company would have shown positive constant currency growth without this incident.

Tata Elxsi reported September quarter results that were largely in-line with expectations, showing constant currency revenue growth after two quarters of decline. EBIT margins expanded by 30 basis points compared to the June quarter. The Media vertical led growth at 3.7% quarter-over-quarter, while Transportation declined 0.5% and Healthcare fell 4.6%. Employee headcount decreased 1.5% from last quarter and 6.6% year-over-year. Despite the sequential recovery, major brokerages maintained negative ratings. Avendus kept a 'Sell' rating with ₹4,690 price target, trimming revenue estimates by 2% for current and next financial years. Kotak maintained 'Sell' at ₹4,000, forecasting 5.4% constant currency revenue decline for FY26. JPMorgan retained 'Underweight' at ₹4,000, noting revenue beat expectations but margins fell short. Motilal Oswal kept 'Sell' at ₹4,400, citing steep valuations at 52 times forward earnings. Among 18 analysts covering the stock, 15 have 'sell' ratings, two have 'buy', and one has 'sell'. Shares closed 2.2% higher at ₹5,580, but remain down over 40% from record highs and 18% year-to-date.

Tata Elxsi is building a multi-year growth pipeline through three key initiatives: AI-first offerings, software-defined vehicle partnerships with Suzuki, and healthcare innovation collaborations with Bayer. The company is positioning itself across technology sectors through these strategic partnerships and AI-focused solutions.