Tata Elxsi tanks as Street cuts target by up to 50% as September quarter net profit falls

Tata Elxsi shares crashed more than 8 per cent after investors' sentiment turned sour following the poor second quarter results. The stock quoted a price of Rs 7,790 on the NSE a piece, down 8 per cent from the previous close of Rs 8465. The stock made an intraday low of Rs 7,735, diving around 9 per cent against 0.50 per cent rise in the benchmark index.

Tata Elxsi is a Tata Group company. The Bengaluru-based design and technology services provider on Friday released the September quarter earnings. It reported a 6 per cent decline in net profit from the Q1FY23. The company's profit before tax (PBT) stood at Rs 219.17 crore, registering a fall of 4 per cent QoQ.

The revenue from operations in the quarter stood at Rs 763.2 crore, rising 28.2 per cent YoY, compared to the corresponding period a year ago. However, it fell short of the Street's expectations.

According to the company, the supply-side challenges impacted the growth.

“We have delivered a quarter of steady growth amidst macro-economic uncertainty and currency headwinds in our key markets. We are seeing strong and sustained growth in the automotive and adjacent segments, led by our EV and digital capabilities. We are gaining market share in both Automotive and Media & Communications, especially in Europe. The numbers are muted in the region due to unfavorable currency movement," Manoj Raghavan, CEO and MD, Tata Elxsi, said while commenting on the company’s performance.

Zee Business panellist Varinder Bansal said that the stock is under pressure due to poor growth. The topline growth has fallen from 7 per cent to 4.5 per cent and Earnings before interest and taxes (EBIT) have corrected by 7.4 per cent.

Brokerages have maintained Underweight ratings on Tata Elxsi after the second quarter business update.

JP Morgan target on Tata Elxsi share price target: Rs 4300

Morgan Stanley target on Tata Elxsi share price target: Rs 5800

Tata Elxsi stock has delivered a stellar return of around 32 per cent in 2022 so far. The stock is available at a discount of around 22 per cent from its 52-week high of Rs 10760.

Tata Elxsi is among the world's leading design and technology services providers across industries, including Automotive, Broadcast, Communications, Healthcare and Transportation.