Shares of Tata Elxsi fell 5 per cent in early trade, slipping to ₹4,425 after opening at ₹4,589.60 against the previous close of ₹4,650.70, as investors reacted to modest sequential growth and a cautious near-term outlook despite a strong year-on-year earnings performance. The decline comes amid concerns over delayed deal closures, mixed demand across verticals and a more conservative growth outlook for FY27.

Tata Elxsi reported a net profit of ₹220.35 crore for the March quarter, up 27.8 per cent y-o-y from ₹172.41 crore in the same period last year. Revenue from operations increased 9.4 per cent y-o-y to ₹993.75 crore, compared with ₹908.33 crore a year ago. However, on a sequential basis, growth remained muted, reflecting delays in deal ramp-ups and continued weakness in certain verticals.

For the full year FY26, profit after tax declined nearly 20 per cent to ₹628.43 crore from ₹784.93 crore in FY25, indicating broader pressures during the year.

The company’s board recommended a dividend of ₹75 per share.

Demand and outlook

Performance during the quarter was led by a stable transportation segment and a recovery in media and communications, while the healthcare vertical remained under pressure due to delayed deal awards.

Management highlighted that geopolitical uncertainties and global trade tensions are leading to cautious client behaviour, particularly impacting deal timelines and ramp-ups. While the deal pipeline remains healthy, conversion timelines have lengthened.

The company expects growth to improve gradually, targeting higher single-digit revenue growth in FY27, supported by transportation-led momentum and a recovery in other verticals.

Domestic brokerages were divided on the outlook .HDFC Securities maintained an add rating with a target price of ₹4,825, noting that while q-o-q growth was slightly below expectations, margin expansion remained strong, supported by currency tailwinds and operating leverage.

Motilal Oswal maintained a sell rating with a target price of ₹3,350, citing a more conservative growth outlook, delayed deal closures and continued reliance on ramp-up of existing deals. The brokerage also highlighted that innovation-led spending remains subdued, particularly in the media and communications vertical.

Brokerages broadly flagged that while margin expansion and operational efficiencies remain positives, the near-term growth outlook is likely to stay moderate amid macro uncertainties and slower decision-making by clients.

Published on April 22, 2026