Tata Elxsi reported revenue of $105 million in Q2 FY26, up 1% QoQ in CC terms, in line with estimate. Growth was led by media and communications (up 3.7% QoQ CC), whereas transportation/healthcare and lifesciences declined 0.5%/4.6% QoQ CC.

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Motilal Oswal Report

Tata Elxsi Ltd.’s muted tech spends across automotive and media are weighing on the nearterm momentum. Growth remains concentrated in a few top accounts that are facing spending constraints. We expect USD revenue to grow modestly at a CAGR of ~6% over FY25-28.

Margins, once a defining strength, have come under pressure due to weak revenue growth and pricing resets during deal renewals.

We reduce our estimates for FY26/FY27/FY28 by 5%/2%/2%.

We expect margins to gradually improve to 22.7% in FY2YE, with an EPS CAGR of ~7.4% through FY28.

Valuations remain steep at ~52x 12 months FWD P/E, which we see as difficult to justify given current headwinds.

We value the stock at 31x Jun’27E EPS, with a target price of Rs 4,400. We maintain our Sell rating.

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