Revenue declined 3.9% quarter-on-quarter and 9% year-on-year, while EBITDA margins contracted by 200 basis points, leading to a 16.3% sequential drop in profit.
Despite the poor print, management expects a steady improvement in both margins and bottom line through the year, as its two largest verticals, Transportation and Media & Communication, are expected to return to growth from Q2 FY26 onwards.
Global brokerage firm Morgan Stanley has maintained an ‘Underweight’ rating on the stock, with a price target of ₹4,660, citing another quarter of weak performance despite low expectations.
Management commentary, however, remained constructive, with hopes of recovery driven by Auto and Media verticals.
While the Tata Elxsi stock has outperformed peers since the April 2025 lows, the continued earnings downgrade cycle has created an unfavourable risk-reward setup.
JPMorgan also has an ‘Underweight’ rating, with a price target of ₹3,800. The brokerage mentioned that the Q1 FY26 results missed sharply on both revenue and margin fronts for the fourth consecutive quarter.
Revenues fell 3.9% in constant currency terms quarter-on-quarter, led by weakness in Media & Telecom (down 5.5%) and Healthcare (down 6.7%), while the Auto segment remained stable (flat).
While the auto outlook is mixed, with Mercedes, Suzuki, EU OEM deals ramping up and JLR stabilising, tariff-related uncertainty continues to weigh on demand, especially in the US.
Management expects the Telecom vertical to return to growth in Q2, supported by large deal ramp-ups, but Healthcare remains challenged due to two client-specific issues.
JPMorgan has cut earnings estimates by 3–5% for FY26E–FY28E.
Bernstein has an ‘Underperform’ rating, with a price target of ₹4,130, citing the company’s fourth straight disappointing quarter. Management attributed the weakness to tariff-related uncertainties, which have delayed project ramp-ups and led to deferred deal signings.
Overall, growth visibility remains low, particularly in the Automotive vertical.
Valuations are considered excessive, with the stock trading at 46x one-year forward P/E.
Shares of Tata Elxsi Ltd. ended 0.26% lower on Thursday at Rs 6,136. The stock has fallen 1% in the past one month.
