Synopsis:
Tata Elxsi Limited reports a 3.87% YoY revenue drop and a 32.52% YoY net profit drop in Q2 FY26 results and MOFS, JPMorgan and Kotak are given sell ratings, with downside potential of up to 28.23 percent.
This Tata Group Stock, engaged in providing design and technology services for automotive, healthcare, broadcast, AI-driven innovation, and more, plunged by 3.20 percent after the company reported September quarterly results with a 32.52 percent YOY net profit drop in Q2 FY26, and analysts giving sell ratings, with downside potential of up to 28.23 percent.
With a market capitalization of Rs. 33,682.52 crores, the share of Tata Elxsi Limited has reached an intraday low of Rs. 5,395 per equity share, down nearly 3.20 percent from its previous day’s close price of Rs. 5,573.15. Since then, the stock has retreated and is currently trading at Rs. 5407.15 per equity share.
Q2 FY26 Result Walkthrough
Coming into the quarterly results of Tata Elxsi Limited, the company’s consolidated revenue from operations decreased by 3.87 percent YOY, from Rs. 955.09 crore in Q2 FY25 to Rs. 918.10 crore in Q2 FY26, and grew by 2.91 percent QoQ from Rs. 892.10 crore in Q1 FY26.
Tata Elxsi Limited generated 96.9 percent of its revenue from the software development & services segments and 3.1 percent from the system integration & support services segment in Q2 FY26.
In Q2 FY26, Tata Elxsi Limited’s consolidated net profit decreased by 32.52 percent YOY, reaching Rs. 154.82 crore compared to Rs. 229.43 crore during the same period last year. As compared to Q1 FY26, the net profit has increased by 7.24 percent, from Rs. 144.37 crore.
Further, the company’s EBITDA has decreased by 27.44 percent, from Rs. 266.4 crore in Q2 FY25 to Rs. 193.3 crore in Q2 FY26. Tata Elxsi Limited’s EBITDA margin has also decreased from 27.9 percent in Q2 FY25 to 21.1 percent in Q2 FY26. Additionally, the PAT margin has reached 16 percent, as compared to 22.5 percent in Q2 FY25.
Tata Elxsi Limited’s basic earnings per share decreased by 32.55 percent and stood at Rs. 24.85 as against Rs. 36.84 recorded in the same quarter in the previous year, 2025.
Analyst Viewpoint and Target Price
Kotak Institutional Equities, a prominent brokerage firm, has recommended a “Sell” call on Tata Elxsi Limited with a target price of Rs. 4,000 per share, indicating a downside potential of 28.23 percent from its previous day’s close price of Rs. 5,573.15.
Kotak described the quarter as mostly in line, with slightly higher revenues but lower profits. Growth came from big deals in media and communications, while a cybersecurity issue at Jaguar Land Rover had little effect.
Kotak expects automotive deals to boost near-term performance but sees ongoing weakness in media and communications, and forecasts a 5.4 percent constant currency revenue decline for FY26, with a slight recovery in H2.
Additionally, JPMorgan has recommended a “Underweight” call on Tata Elxsi Limited with a target price of Rs. 4,000 per share, indicating a downside potential of 28.23 percent from its previous day’s close price of Rs. 5,573.15.
Tata Elxsi’s automotive business grew well, even without the Jaguar Land Rover impact. JPMorgan is optimistic about a recovery from new deals, expecting the second half of FY26 to improve and double-digit growth in FY27. Demand is strong in Europe, Japan, and India, while the US and Media/Telecom sectors remain weak.
Furthermore, Motilal Oswal Financial Services has recommended a “Sell” call on Tata Elxsi Limited with a target price of Rs. 4,400 per share, indicating a downside potential of 21.02 percent from its previous day’s close price of Rs. 5,573.15.
Motilal Oswal noted weak demand and ongoing challenges in the Media and Healthcare. While the company’s plan for double-digit growth in FY27 is positive, MOSL said its current stock price, at 52 times next year’s earnings, is too high to justify, given the tough business environment.
Company Overview
Tata Elxsi Limited was established in 1989 as a technology and design services company under the Tata Group. It provides product engineering, digital solutions, and innovation services in industries like automotive, healthcare, broadcast, and transportation, helping global clients develop advanced technology products and systems.
Written By – Nikhil Naik
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