Reduce Tata Elxsi, target price Rs 4,250: ICICI Securities

ICICI Securities downgrades Tata Elxsi to 'Reduce' with a revised target price of Rs 4250, citing muted Q4FY25 results and structural macroeconomic concerns. Despite new large deals and optimism for Q1FY26, revenue contracted by 5.3% QoQ. The brokerage maintains its estimates, tweaking FY26E EPS slightly, while recommending 'Reduce' based on a 30x forward PE.

ICICI Securities has raised Tata Elxsi to Reduce from sell with a revised target price of Rs 4250 (Rs 4,300 earlier). The current market price of Tata Elxsi is Rs 5413.25.

Tata Elxsi, incorporated in 1989, is a Mid Cap company with a market cap of Rs 32985.67 crore, operating in the IT Software sector. Tata Elxsi' key products/revenue segments include Software Development Charges and Traded Goods for the year ending 31-Mar-2024.

Financials For the quarter ended 31-03-2025, the company has reported a Standalone Total Income of Rs 951.41 crore, down -2.82% from last quarter Total Income of Rs 979.

02 crore and up 1.25% from last year same quarter Total Income of Rs 939.63 crore.

The company has reported net profit after tax of Rs 172.42 crore in the latest quarter. The company's top management includes Mr.

N G Subramaniam, Ms.Ashu Suyash, Prof.Anurag Kumar, Mrs.

Shyamala Gopinath, Mr.Sudhakar Rao, Mr.Ankur Verma, Mr.

Manoj Raghavan, Mr.N G Subramaniam, Mr.Soumitra Bhattacharya, Ms.

Ashu Suyash, Prof.Anurag Kumar, Mrs.Shyamala Gopinath, Mr.

Sudhakar Rao, Mr.Ankur Verma, Mr.Manoj Raghavan, Mr.

Soumitra Bhattacharya. Company has BSR & Co. LLP as its auditors.

As on 31-03-2025, the company has a total of 6 crore shares outstanding. Investment RationaleTata Elxsi (TELX) has reported a muted Q4FY25 print with revenue contraction of 5.3% QoQ CC, roughly in line with our estimate (of -5.

9%) and falling below consensus. Transportation vertical downturn was sharp, though already built into ISec?s estimate. Other highlights of Q4 include: 1) 3 large deals signed with higher annuity component, 2) a pivot towards emerging geographies 3) company highlighting growth bounce back in Q1FY26.

Though new deals give some near-term respite, structural and macroeconomic issues loom large. ICICI Securities largely maintains its estimates and tweak FY26E EPS by 130bps on slightly better near-term visibility lent by large deals and optimism in healthcare-led demand. Recommend REDUCE (from Sell - on recent stock correction of 7% in last one month) set at an unchanged 1-year forward PE of 30x.

Promoter/FII Holdings Promoters held 43.91 per cent stake in the company as of 31-Mar-2025, while FIIs owned 12.73 per cent, DIIs 8.

53 per cent..