Tata Elxsi shares fall 3% on disappointing Q1 results. Should you buy or sell?
Tata Elxsi's shares dropped 3% on BSE after a 3% YoY profit fall to Rs 184 crore in June 2024. Revenue rose 9% YoY to Rs 926 crore; net profit sequentially declined 6%. EBITDA fell 3% QoQ. Margins at 27.23%. CEO Manoj Raghavan emphasized operational excellence and fiscal discipline. Kotak: 'Sell', Choice: 'Reduce'.
Shares of fell nearly 3% to Rs 6,930 in Thursday's trade on BSE after the firm reported a 3% year-on-year (YoY) fall in net profit to Rs 184 crore for the first quarter ended June 2024. The same stood at Rs 189 crore in the last-year period.Meanwhile, its revenue from operations in the reporting period increased 9% YoY to Rs 926 crore as against Rs 850 crore in the corresponding period of last year.
On a sequential basis, net profit for the quarter declined 6% from Rs 196 crore clocked in the preceding December quarter. Meanwhile, revenues improved 2% quarter-on-quarter (QoQ).
The company clocked EBITDA of Rs 252 crore in the reporting quarter, down 3% QoQ. On a YoY basis, EBITDA growth was flat.
Margins during the quarter too declined 162 basis points quarter-on-quarter to 27.23%.
“We executed very well on operational excellence and fiscal discipline in this quarter towards bottom-line performance, despite the impact of an exceptional one-off expense in the quarter and an increase in the effective tax rate with the change in SEZ benefits for one of our facilities," said Manoj Raghavan, CEO and MD, Tata Elxsi.
Should you buy, sell, or hold Tata Elxsi's stock? Here's what analysts say:
Kotak Institutional Equities
Kotak Institutional Equities maintained its 'Sell' rating on Tata Elxsi with a target price of Rs 5,500.
"We raise our revenue estimates by ~1% over FY2025-27E on improved outlook. Our EBIT margin estimates are marginally lower by 20-30 bps over FY2026-27E, as we expect management to focus on reinvestment to strengthen relationships with strategic clients and prioritize medium-term growth," the brokerage firm said.
"We expect the EBIT margin to remain rangebound over the medium term. Our revised FV of Rs 5,500 implies 31X Sep 2026E P/E," it said.
Choice Broking
Choice Broking downgraded its rating on Tata Elxsi to 'Reduce' with a target price of Rs 7,450.
"Company steps into the second quarter with the confidence of a healthy deal pipeline, continued growth in the transportation business, new customer wins and expansion of business with strategic customers across verticals. We downgrade our rating to REDUCE with a revised target price of Rs 7,450 implying a PE of 47x on FY26E EPS of Rs 158," it said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
Source: Stocks-Markets-Economic Times
