Tata Elxsi
Stock Snapshot
Price Performance
Vista Outlook
View Technicals Analysis →Basis of our Recommendation
Tata Elxsi's recent performance reflects a complex interplay of growth opportunities and margin pressures. Management has highlighted a milestone quarter with revenues surpassing INR 1,000 crores, driven by strong execution in the Media and Communication and Transportation segments. However, a sequential EBIT margin decline of 330 bps due to one-time costs and increased onsite hiring raises concerns about short-term profitability. Despite these challenges, management remains optimistic about long-term growth, particularly through AI-enabled platforms and deep domain expertise. Vista's forecast anticipates accelerating revenue growth beyond historical levels, supported by a robust pipeline in the US and APAC regions, although competitive pricing pressures may slightly impact margins. The macro environment in India is favorable, with strong manufacturing activity and contained inflation, which could bolster demand for IT services. Over the next 12-24 months, key opportunities include the successful execution of AI-driven projects and strategic partnerships, while watchpoints include potential margin compression from wage hikes and the need for effective talent management
Why We Like This Stock
- Strong revenue growth driven by execution in Media and Communication and Transportation segments
- Management's focus on AI-enabled platforms positions the company well for future demand
- Favorable macroeconomic conditions in India support the IT services sector
Things To Watch Out For
- Recent EBIT margin decline due to one-time costs and increased onsite hiring
- Potential margin compression from competitive pricing pressures and wage hikes
- Uncertainty in the healthcare segment and sluggish demand in the European market
Key Parameters
Financial Snapshot
| Actuals | Forecast | ||||
|---|---|---|---|---|---|
| FY24 | FY25 | FY26 | FY27 | FY28 | |
| Revenue (Cr.) | 3,552 | 3,729 | 3,757 | 4,038 | 4,420 |
| Profit Before Tax (Cr.) | 1,048 | 1,029 | 921 | 946 | 1,093 |
| PBT Margin | 29.5% | 27.6% | 2451.4% | 23.4% | 24.7% |
| Net Profit (Cr.) | 785 | 774 | 651 | 668 | 772 |
| Earnings Per Share | 126.1 | 124.2 | 104.6 | 107.3 | 123.9 |
Analyst Recommendations
| Broker | Recommendation | Target Price | Date |
|---|---|---|---|
| Deven Choksey | ▼ Sell | 3,916 | 14-Jul-2026 |
| Elara Capital | ▼ Sell | 3,300 | 15-Jul-2026 |
| HDFC Securities | ► Add | 4,100 | 15-Jul-2026 |
| ICICI Securities | ▼ Reduce | 3,330 | 15-Jul-2026 |
| JPMorgan | ► Hold | 3,500 | 15-Jul-2026 |
| Kotak Securities | ▼ Sell | 3,000 | 15-Jul-2026 |
| Morgan Stanley | ▼ Underweight | 4,200 | 22-Apr-2026 |
| Prabhudas Liladhar | ▼ Reduce | 3,350 | 15-Jul-2026 |
Company Overview
Show Company Profile
Tata Elxsi Limited provides product design and engineering, systems integration, and support services in India, the United States, Europe, and Internationally. The company operates through two segments, Systems Integration and Support, and Software Development and Services. It offers iCX, a SaaS-based solution for automating, monitoring, and managing CPEs; and AIVA, an AI-based video analytics platform that automates video tagging, object detection, content indexing, and metadata generation. It also provides QoEtient, a platform for video streaming services; TEPlay, an OTT/IPTV platform; Neuron, an autonomous network platform for telco operators; and uLike, a platform for AI-powered content recommendation engine. In addition, it offers TETHER, a cloud-based platform for vehicle connectivity; eMobility HILS, a scalable solution for validating electric vehicle systems; Robo-Taxi, a platform for autonomous ride-hailing; AVENIR, a platform for real-time data processing, validation, and integration for software defined vehicles; AutonomAI, an AI-driven platform for self-driving capabilities; and MOBIUS+, a blockchain-powered solution. Further, it provides TEDREG, a regulatory intelligence platform for compliance management; Digital Health Platform, a customizable platform for remote patient monitoring, virtual consultations, and personalized health insights; TEngage, a digital health platform for patient engagement tools with customizable workflows, interactive communication channels, and performance tracking dashboards; TEDAX Big Data, an AI-driven analytics platform; and TEcare, a care management platform for multi-channel support and care plan customization. It serves automotive, broadcast and media, communications, off-highway equipment, healthcare and life sciences, appliances and consumer electronics, rail, semiconductor, and aerospace industries. The company was incorporated in 1989 and is headquartered in Bengaluru, India.