Tata Elxsi's share price crashed by 7.5% on Friday, July 11, after missing estimates in its Q1FY26 quarterly earnings across various verticals. In the early deals, this Tata Group-backed midcap IT stock nosedived by at least 7.5%. Following the weak Q1, Choice Broking Institution has assigned a SELL rating on the company.
Tata Elxsi Share Price:
During the early trade of July 11, Tata Elxsi stock price dropped by 7.5% to hit an intraday low of Rs 5679 apiece.
At the time of writing, the tech stock traded at Rs 5946.65 apiece, down by 3.14% on BSE, with a market cap of Rs 37,038.53 crore.
Currently, Tata Elxsi's 52-week high and low are at Rs 9,082.90 apiece and Rs 4,601.05 apiece respectively. Its return on equity is at 31.57%. and price-to-equity ratio is at 47.13x.
Why Tata Elxsi Share Price Crashed After Q1?
The reason behind the decline is weak Q1 earnings.
"TELX has reported a muted Q1FY26 with revenue contraction of 3.9% QoQ CC, below our expectations, driven by continued softness across key verticals. Transportation segment remained flat amid tariff uncertainties & Chinese competition, impacting Tier-1 R&D spends, though recent large deal wins & a strong pipeline offer growth visibility. Media & Communication declined 5.5% due to weak demand environment & ongoing industry consolidation, with recovery expected in Q2 on deal ramp-ups," said Choice Institutional Equities analysts in a note.
Also, TELX reported an EBIT margin of 18.2% in Q1FY26, down 190 bps QoQ from 20.1% in Q4FY25, primarily impacted by weak revenue performance & transition costs associated with ramping up large consolidation deals.
During Q1FY26, the 36-year-old company reported a net profit of Rs 144.36 crore, down by 21.6% YoY and 16.3% QoQ. Meanwhile, consolidated revenue stood at Rs 892.09 crore in Q1FY26, declining from Rs 926.45 crore in Q1FY25 and Rs 908.33 crore in Q4FY25. During the quarter under review, EBITDA came in at Rs 186.7 crore, while its margin is at 20.9%.
Should You BUY/SELL Tata Elxsi Shares?
"We believe that near-term growth remains challenging, however recent large deal wins & a strong pipeline across Transportation & HLS will provide revenue visibility for recovery from H2FY26. We remain watchful on execution and ramp-up timelines," said Choice Institutional Equities note
Analysts here added, "We anticipate modest headcount additions going forward, with management maintaining a cautious hiring approach given adequate bench strength & preference for aligning recruitment with tangible demand recovery."
On the valuation, analysts' note said, "TELX's performance lagged expectations, with broad-based weakness across key segments. The stock trades at an extremely expensive PE of 46x on FY27E EPS. Near-term challenges across Automotive and Media & Communications verticals remain. We expect a pickup in growth toward H2FY26, with the ramp-up of large deal wins in Auto. TELX's utilisation has been impacted by significant volume build-up in anticipation of the ramp-up of large deals, which is likely to be more gradual than expected."
"We have lowered our estimates by approximately 3.5% for FY26E and FY27E, and have introduced FY28E projections. Our revised target price is INR 4,165, which implies a PE multiple of 28x (unchanged) as we roll forward our valuation to H2FY28E earnings. We maintain a SELL rating due to rich valuations," Choice's note added.
About Tata Elxsi:
Tata Elxsi is amongst the world's leading providers of design and technology services across industries including Automotive, Broadcast, Communications, Healthcare and Transportation. The company enables customers to reimagine their products and services through design thinking and application of digital technologies such as IoT (Internet of Things), Cloud, Mobility, Virtual Reality and Artificial Intelligence.
Disclaimer: The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.
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