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Informist, Friday, Jul. 10, 2026

 

By Shakshi Jain

 

NEW DELHI – Design and technology services provider Tata Elxsi Ltd. is expected to post a moderate sequential decline in its net profit for the June quarter because of upfront costs associated with ramp-up of large deals, according to analysts. The Tata group company's revenue is likely to rise marginally on quarter, led by the media and communications vertical and some recovery in the healthcare and life sciences category, brokerages said. 

 

If analysts' consensus estimates hold, the company's bottom line will decline after the net profit more than doubled sequentially in the March quarter. The company's top line will grow for a fourth consecutive quarter, albeit at a slower pace than in the trailing quarter.

 

The company's standalone net profit for the June quarter is expected to fall nearly 9% sequentially to INR 2.01 billion, according to the average of estimates from six brokerages. However, this would mean growth of 39% on year. The highest net-profit estimate is INR 2.2 billion from Prabhudas Lilladher Pvt. Ltd. and the lowest is INR 1.86 billion from ICICI Securities Ltd.

 

The company's revenue for the reporting quarter is expected to rise 2.6% sequentially and over 14% on year to INR 10.2 billion, according to the average of estimates. The highest top line estimate is INR 10.36 billion from ICICI Securities and the lowest is INR 10.03 billion from Nirmal Bang Equities Pvt. Ltd.

 

In constant currency terms, brokerages expect Tata Elxsi's revenue to grow 1-2.3% sequentially for the June quarter. This growth is likely to be driven by a recovery in the healthcare and life sciences vertical and the continued ramp-up of large media and communications deals, they said. "Transportation may remain steady, backed by OEM-led programmes and improving offshoring," Motilal Oswal Financial Services Ltd. said in an earnings-preview report.

 

The global automotive industry is grappling with a structural slowdown triggered by supply chain disruptions, geopolitical strife, and a sharp rise in commodity prices. Last week, automotive software solutions provider KPIT Technologies Ltd. warned of lower-than-expected revenues and margins for the June quarter due to a weak business outlook among European carmakers. This led to a 25?ll in its share price and also weighed on peer stocks, including those of Tata Elxsi. The transportation vertical accounts for more than 50% of Tata Elxsi's overall top line. 

 

Tata Elxsi's constant currency revenue had grown 0.9% sequentially in the March quarter. The company had reported a standalone net profit of INR 2.2 billion for the quarter on revenues of INR 9.94 billion. In a conference call with analysts after the March-quarter earnings, the company's management had said delay in expected deal awards had prevented higher growth in revenue for the March quarter. It had added that the healthcare business had reached the bottom in the quarter, and was hopeful of growth from the June quarter.

 

OPERATIONS, COMMENTARY

Motilal Oswal Financial Services estimates Tata Elxsi's earnings before interest, tax, depreciation, and amortisation at INR 2.46 billion for the June quarter, just a notch above the INR 2.45 billion reported for the trailing quarter.

 

Most brokerages expect the company's earnings before interest and tax margin to contract by 20-80 basis points sequentially due to investments towards capability expansion and a drag from competitively bid large deals in the media segment, which will be partly offset by support from a weak rupee in the quarter. Only Nirmal Bang Equities differed and projected a 10 bps expansion on the metric. "EBIT margin is expected to expand by 10 bps to 22.4% as revenue picks up, which will bring operational efficiencies and utilisation (which is low at 73% and also starts improving)," the brokerage said.

 

Tata Elxsi had reported an EBIT margin of 22.3% for the March quarter.

 

Although the rupee appreciated 0.2% against the dollar in the June quarter, it traded at lower levels for a majority of the three months, touching an intraday low of INR 96.96 May 20.

 

Tata Elxsi will announce its June quarter earnings Tuesday. Investors await the management's commentary on demand across verticals, particularly the automotive category, margin improvement, and deal pipeline. Market participants will also watch out for updates tied to the engagement with Jaguar Land Rover Automotive PLC and large Japanese clients in the transportation vertical, and progress in the new focus areas of aerospace, defence, and battery energy storage. 

 

"We expect JLR revenues to remain in a narrow band during FY2027E," Kotak Securities said. Jaguar Land Rover, a long-time client of Tata Elxsi, had suffered a cyberattack  in 2025 that forced a production shutdown and consequently impacted Tata Elxsi's quarterly earnings.

 

Friday, its shares closed at INR 3,690.30 on the National Stock Exchange, up almost 2% from Thursday. The stock is down almost 21% since the company reported its March quarter earnings. It is also down nearly 43% from its 52-week high of INR 6,439.5, recorded on Jul. 16 last year. 

 

Of the seven research reports on Tata Elxsi available with Informist, three have a 'sell' recommendation on the stock while two have 'hold' and 'buy' recommendations each. The average target price of the 'sell' recommendations is INR 4,083 and that of the 'buy' calls is INR 4,980. This is around 11% and 35% higher than Friday's closing price, respectively.

 

Following are the Apr-Jun earnings estimates, in INR billion, for Tata Elxsi from four brokerages, in descending order of net profit estimates:

 

Broking firm	Net sales	Net profit	EBITDA
Prabhudas Lilladher Pvt Ltd	10.20	2.20
Nirmal Bang Equities Pvt Ltd	10.03	2.03
Motilal Oswal Financial Services Ltd	10.33	2.03	2.46
Elara Securities (India) Pvt Ltd	10.04	2.01
Kotak Securities Ltd	10.22	1.92
ICICI Securities Ltd	10.36	1.86
Average	10.20	2.01	2.46

 

End

 

US$1 = INR 95.33

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Himanshi Gupta

 

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