Nearly Half of Analysts Keep ‘Sell’ Call on Tata Elxsi After Q2

what happened

Tata Elxsi shares are set to react on Wednesday, October 14, to the company’s September-quarter results. CNBC-TV18 reported that the figures were released after Tuesday’s market close and came in above expectations. Constant-currency revenue growth reached 2.3%, compared with an anticipated 1.5%, while the EBIT margin was 19.7%, above the CNBC-TV18 poll of 19.2% and the previous quarter’s 19%.

JPMorgan retained its “neutral” rating and a ₹3,200 price target, implying 6.6% downside from current levels. The bank said the positive growth surprise was driven by automotive deal wins in the US and India, while the European Union market remained under pressure. JPMorgan expects uncertainty in the EU to keep H2 FY27 growth below H1, despite management’s guidance for a stronger second half excluding the EU. It also said a return to the 22% margin reported in the fourth quarter of financial year 2026 would take time. The firm cut its earnings estimate by 10% to 11%, mainly because of 200 to 240 basis-point reductions in margin assumptions for financial years 2028-2029.

Motilal Oswal kept its “sell” rating but raised its target to ₹2,970, still indicating 13% downside from Monday’s close. The brokerage expects revenue growth to improve in the second half across all three major verticals, although sustained acceleration will depend on new deal wins, which generally take 2-3 quarters to ramp up. It identified subdued European automotive demand as a key constraint, citing cautious customer spending, lower engineering outlays and delayed deal closures.

Among 19 analysts covering Tata Elxsi, seven have a “buy” rating, three recommend “hold” and nine advise selling. The consensus target implies only 2% upside. Shares ended Tuesday 5.2% higher at ₹3,426.7 ahead of the earnings release, but remain down 35% so far this year.

why it matters

The better-than-expected quarter did not remove concerns over Tata Elxsi’s premium valuation, European exposure and the pace of margin recovery. Those factors continue to shape the cautious analyst consensus despite stronger projected growth than some peers.

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