Tata Elxsi Share: 8% Returns In 1 Day After Q2 Results, Buy This Tata Stock? JP Morgan, Motilal, JM Recommends

Tata Group-backed 37-year-old Tata Elxsi shares witnessed a blockbuster rally on Wednesday, October 14, after double-digit growth in Q2 net profit. Also, the rally was driven by its better-than-expected performance in revenue and margins. Accordingly, strong buying led Tata Elxsi stock to give more than 8% returns in less than 1 day. Should you buy more or book profits?

Tata Elxsi Share Price

At the time of writing, Tata Elxsi share price gained by 6.2% or Rs 212.15 to trade around Rs 3638.65 apiece on BSE, with market cap of Rs 22,670.87 crore. The stock is near its day's high of Rs 3,706.00 apiece. Taking into consideration the intraday high, Tata Elxsi shares skyrocketed by a whopping 8.2% on BSE.

Tata Elxsi Q2 Results:

The Tata midcap company reported a net profit of Rs 170.2 crore in Q2FY27, broadly flat from net profit of Rs 171 crore in Q1FY27. But the company's PAT jumped by 10% YoY from Rs 154.81 crore in Q2FY26.

Meanwhile, revenue from operations came in at Rs 1,055.7 crore, registering a growth of 3.4% QoQ. Constant currency revenue growth stood at 2.3% QoQ. EBITDA stood at Rs 231.4 crore, while EBITDA margins came in at 21.9%.

On segment-wise performance, Manoj Raghavan, CEO and Managing Director, Tata Elxsi said, "The Transportation vertical, which accounts for more than 55% of our SDS segment, posted growth of 2.0% QoQ in constant currency. Amongst new deal wins, we won a strategic multi-year deal from a leading automotive OEM for a next-generation cloud-based telematics and connected vehicle ecosystem."

"Our Media & Communications vertical, which accounted for 33.6% of our SDS segment, registered continued growth at 3.4% QoQ in constant currency. This growth was led by continued deal ramp-ups across our leading customers and new deal wins," the CEO added.

Looking ahead, Raghavan added, "We have delivered strong operational excellence and resilient growth across customers and industry verticals in a volatile macro environment. We look forward to sustaining growth in the second half of the financial year, even as we continue to invest in differentiated AI-first offerings and services and focus on continued operational excellence."

Should You Buy TATA Elxsi Share Price?

Despite reporting better-than-expected earnings, experts recommend SELL on the stock.

While giving "REDUCE" recommendation on Tata Elxsi and lowering its target to Rs 3,200 from Rs 3,400, JP Morgan said, "Incrementally from here, it (Tata Elxsi) expects margins to expand gradually over the next few quarters, indicating it will take longer to get back to 4Q26 margins levels of 22.3%."

Also, Motilal Oswal has maintained its "SELL" rating on the company with target price of Rs 2,970. Motilal's note said, "Multi-year engagements and a pipeline of opportunities across existing and emerging verticals provide revenue visibility. Aerospace and defense opportunities are progressing, although their near-term revenue contribution is likely to remain modest."

Furthermore, JM Financial has also recommended REDUCE with target price of Rs 3,200.

JM's note said, forward-looking indicators - i) Headcount -1.6% QoQ/+6.7% YoY. ii) Management expects H2FY27 revenue to exceed H1FY27, supported by US/India automotive ramp-ups, Media & Communications momentum and Healthcare recovery, although European OEM decision-making remains slow. iii) Revenue leakages are lower versus a year ago as large multi-year automotive/media deals strengthen the base and the shift from automotive suppliers to OEMs reduces exposure to project run-offs. iv) Q3 has fewer working days; however, the extent of furloughs is still uncertain; engineering deals typically take two-three quarters to scale. v) Margins should improve gradually over two-three quarters, aided by operating leverage, higher utilisation (78% in Q2) and pyramid optimisation; FY27 wage hikes are complete.

Accordingly, they added, "We revise upward FY27-29E EPS by 2-4%. Our FY27/ FY28 EPS remains 10%/9% below consensus EPS; we are at 7.3%/9.3% cc YoY revenue growth in FY27/FY28 with 19.8%/20.4% EBIT margin in FY27/FY28."

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

Disclaimer: The views and recommendations expressed are solely those of the individual analysts or entities and do not reflect the views of Goodreturns.in or Greynium Information Technologies Private Limited (together referred as "we"). We do not guarantee, endorse or take responsibility for the accuracy, completeness or reliability of any content, nor do we provide any investment advice or solicit the purchase or sale of securities. All information is provided for informational and educational purposes only and should be independently verified from licensed financial advisors before making any investment decisions.