Earnings Outlook
Tata Elxsi to see gradual recovery in Q2 after 3 weak quarters
This story was originally published at 15:08 IST on 8 October 2025
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By Arya S. Biju
MUMBAI – After reporting weak earnings for the last three quarters, Tata Elxsi Ltd. is expected to see a gradual recovery in its earnings in the September quarter led by a revival in its media and communication and transportation segments. However, weakness in the company's hi-tech and medical devices verticals and halt in operations of one of its top clients are expected to limit the growth in its top line for the latest quarter, according to analysts.
The Tata group company's bottom line for the quarter is expected to rise over 7% sequentially to INR 1.55 billion, according to the average of estimates from seven brokerages. However, on a year-on-year basis, the company's net profit is expected to fall a little over 32% from INR 2.29 billion. Motilal Oswal Financial Services Ltd. has the highest estimate of INR 1.66 billion for the company's net profit while ICICI Securities Ltd. has the lowest estimate of INR 1.38 billion.
The company's top line for the September quarter is expected to grow nearly 3% on quarter but decline 4% on year to INR 9.17 billion, according to the average of estimates from seven brokerages. Nirmal Bang Equities Pvt. Ltd. has the highest estimate of INR 9.32 billion for the company's top line while Prabhudas Lilladher Pvt. Ltd. has the lowest estimate of INR 9.00 billion.
Prabhudas Lilladher and HDFC Securities Ltd. expect the company to report a sequential decline in its revenue in constant currency terms for the September quarter, but Nirmal Bang Equities, Motilal Oswal, and Kotak Institutional Equities expect it to improve around 1%. ICICI Securities on other hand, expects the company's revenue in constant currency terms to remain largely flat on quarter.
Prabhudas Lilladher expects the company to report a near 2% sequential decline in its revenue in constant currency terms and a 1.6?cline in its dollar revenue impacted by a halt in operations of one of its top clients, Jaguar Land Rover, after a cyberattack in September. ICICI Securities expect this to have resulted in three out of the 12 weeks being unbillable for the top account. For the June quarter, top five clients contributed around 45% to the company's total sales and the top 10 clients contributed around 55%.
Despite this disruption from the client side, few analysts expect some recovery in the company's transportation business, which accounts for over 50% of its total sales, during the latest quarter. For the June quarter, its transportation business reported a 4% sequential growth in revenue in actual currency terms, but revenue was flat in constant currency terms.
Among other verticals, the media and communications vertical is expected to recover in the September quarter after reporting an over 5?ll in revenue during the previous quarter, Motilal Oswal said in an earnings preview note. In contrast, the performance of the healthcare and life sciences segment of the company is expected to remain soft during the latest quarter, the brokerage added. During the June quarter, revenue from the healthcare and lifesciences segment had fallen nearly 7% on a sequential basis primarily on account of the tariff related impact on medical device engineering programmes and spends with two key customers in the US. While announcing its June quarter earnings, the company had said that it expects a recovery in the healthcare segment from the second half of 2025-26 (Apr-Mar).
Analysts are divided on how the company will fare in terms of margin. Elara expects the company's margin to improve 160 bps sequentially aided by operating leverage and a low base in the previous quarter, which was impacted by lower sales. Similarly, Kotak expects the company's margin to improve 60 bps on quarter led by operating efficiencies. ICICI Securities, on the other hand, expects the company's margin to decline 40 bps sequentially on slower growth, offsetting the benefit from depreciation of rupee.
The company will announce its June quarter earnings Thursday. Investors will watch out for management commentary on recovery in the transportation and media and communication verticals, the impact of the curb on exports of rare earth metals by China and engagements with JLR and other clients in the transportation vertical. The management's commentary on the impact of the recent hike in H-1B visa fee and tariff announcement by the US government will also be monitored. Investors will also watch for updates on order book, deal pipeline, and details of the company's recent deal with Mercedes-Benz Research and Development India.
All 10 research reports on the company available with Informist have a 'sell' or equivalent rating on the stock with an average target price of INR 5,070. At 1414 IST, shares of the company traded 1.6% higher at INR 5,475 on the National Stock Exchange. The stock has fallen nearly 11% since the announcement of its June quarter earnings on Jul. 10.
For the June quarter, the company had reported a net profit of INR 1.44 billion, down over 16% on quarter and way below analysts' estimate of INR 1.70 billion. Its revenue fell nearly 2% on quarter to INR 8.92 billion, also below the Street's view of INR 9.03 billion.
The following are the Jul-Sept earnings estimates for Tata Elxsi based on reports from seven brokerages in descending order of the estimate of net profit in INR million:
| Brokerage | Net Sales | Net Profit | EBITDA |
| Motilal Oswal Financial Services Ltd | 9,258 | 1,662 | 2,129 |
| Nirmal Bang Equities Pvt Ltd | 9,321 | 1,651 | -- |
| Elara Securities (India) Pvt Ltd | 9,149 | 1,596 | -- |
| HDFC Securities Ltd | 9,130 | 1,550 | -- |
| Kotak Institutional Equities | 9,141 | 1,520 | -- |
| Prabhudas Lilladher Pvt Ltd | 9,000 | 1,500 | -- |
| ICICI Securities Ltd | 9,177 | 1,380 | -- |
| Average | 9,168 | 1,551.29 | 2,129 |
End
Edited by Akul Nishant Akhoury
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