Tata Elxsi Q2 Results: shares surged on Wednesday after the Tata Group’s IT services and design company reported double-digit revenue growth and higher net profit for the September quarter.
While the results showed an improvement in revenue and sequential operating performance, rising employee costs and an uneven demand environment continued to weigh on the company’s profitability outlook.
The stock’s sharp rally also came after a prolonged decline, with shares still trading well below their 52-week high.
Tata Elxsi shares surged 7% to an intraday high of ₹3,664.20 on the BSE on Wednesday, October 14, following the company’s Q2FY27 results. The rally extended the stock’s recent recovery, with shares gaining 19% over the past week and 8.5% over the past month.
However, the remained down 1% over three months, 17% over six months and 31% over the past year, highlighting the extent of its earlier decline. It was still around 38% below its 52-week high of ₹5,949.95, recorded in January 2026, despite the latest gains. The stock had touched a 52-week low of around ₹3,000 on October 8.
The recent gains have helped the stock recover from its lows, but its longer-term performance highlights the challenges it has faced.
One must note that the post-results gains may not necessarily signal a sustained turnaround, as brokerages remain cautious about demand in key overseas markets.
Tata Elxsi Q2 results: Key highlights
Tata Elxsi reported a 10% year-on-year (YoY) increase in net profit to ₹170 crore for the , compared with ₹155 crore in the year-ago period. Revenue from operations rose 15% to ₹1,056 crore from ₹918 crore, while total income, including other income, increased 13% to ₹1,090 crore from ₹967 crore.
The company reported that revenue growth was supported by continued traction across its key business verticals, although the supplied material did not include a verbatim management quotation on this point.
The company’s sequential performance also improved. Revenue grew 3.4% quarter-on-quarter in rupee terms, while constant-currency revenue increased 2.3% sequentially, exceeding expectations of 1.5%. EBIT margin stood at 19.7%, according to the results shared by the company.
Operating performance also improved sequentially, with EBIT rising 7.3% to ₹207.8 crore from ₹193.7 crore in the previous quarter.
Commenting on the performance, Tata Elxsi CEO and Managing Director Manoj Raghavan said, “During the second quarter of FY’27, Tata Elxsi reported operating revenue of Rs. 1,055.7 crores, growing 3.4% QoQ in rupee terms and 2.3% QoQ in constant currency. This growth was broad-based across all three key verticals.”
However, rising costs remained a concern. Total expenses increased 13% YoY to ₹851 crore from ₹752 crore. Employee benefit expenses, the company’s largest cost component, rose 15% to ₹620 crore from ₹539 crore. Other expenses also climbed 15% to ₹131 crore from ₹114 crore.
For the first half of FY27, net profit increased 14% YoY to ₹341 crore from ₹299 crore. Profit before tax rose 15% to ₹472 crore from ₹411 crore, while total income from operations grew 13% to ₹2,153 crore from ₹1,897 crore.
Should you buy, sell or hold Tata Elxsi shares?
Domestic brokerage house Motilal Oswal has maintained its ‘Sell’ rating on Tata Elxsi while raising its target price to ₹2,970. The revised target still implies a downside of around 13% from Tuesday’s closing price.
The brokerage expects revenue growth in the second half of FY27 to improve compared with the first half, with growth anticipated across all three major business verticals. However, it cautioned that a sustained acceleration would depend on deal wins, as new engagements typically take two to three quarters to ramp up. It also noted that new engagements generally require two to three quarters to scale up, making deal wins an important factor in determining the company’s growth trajectory.
The brokerage identified subdued automotive demand in Europe as a key constraint on the company’s growth prospects. Cautious customer spending, delayed decision-making and slower deal closures have affected automotive engineering spending in the region.
Motilal Oswal said, “The US and India are expected to remain relatively supportive, while growth across other verticals and geographies should partly offset the weakness in Europe.” It also reduced its earnings per share (EPS) estimates for FY27 and FY28 by 3% and 1%, respectively.
Meanwhile, Choice Broking maintained ‘Add’ rating on the stock with an unchanged target price of ₹3,520, based on 22 times the average estimated earnings per share (EPS) for FY28 and FY29. It identified stronger Transportation growth, deal conversions in Europe and structural margin improvements as key catalysts.
The brokerage expects the second half of FY27 to outperform the first half, supported by project ramp-ups and improving visibility in Healthcare. However, weak automotive demand in Europe and delayed deal conversions are likely to constrain near-term growth, while Aerospace and Defence programmes are expected to take another two to three quarters to contribute meaningfully.
Margin expansion is expected to be gradual, driven by better utilisation and workforce-pyramid correction. The brokerage expects the company to close FY27 with an EBIT margin of 20.3%, supported by project ramp-ups and internal efficiency measures.
It said, “We expect company to close FY27 at 20.3% EBITM, on account of ramp-ups and execution of internal levers.”
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.