Tata Elxsi shares fall 3% after second-quarter profit falls 32.5% year-on-year, but rise sequentially

Shares of Tata Elxsi witnessed selling pressure and fell 3% to the day’s low of Rs 5,406 per share on the NSE on Friday after the design and technology services company reported a 32.5% decline in net profit to Rs 154.81 crore for the second quarter of FY26. However, sequential performance showed a 7.2% increase from Rs 144.37 crore in Q1-26, offering a modest bright spot amid the broader year-on-year weakness.

Tata Elxsi’s operating revenue fell to Rs 918.1 crore in Q2FY26, compared to Rs 955.09 crore a year ago. Earnings before interest, taxes, depreciation and amortization (EBITDA) stood at Rs 193.3 crore, while margins fell to 21%. Profit before tax (PBT) fell 28% annually to Rs 214.72 crore, but rose 9.4% sequentially.

The company’s Media & Communications and Transportation segments showed relative resilience, while sequential revenues in the US market rose 7.9%, contributing positively to quarterly performance. However, weakness in the healthcare sector continued due to the uneven demand environment that has weighed on Tata Elxsi in recent quarters.

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Prospects in the Real Estate Industry Motilal Oswal maintained a sell rating on Tata Elxsi and slightly lowered its price target to Rs 4,400 from Rs 4,450. The brokerage noted: “Sales in line, but margin lacking; growth led by Media & Communications.”

It further highlighted that the company expects revenue to grow by 4% in the second half of 2026, while EBIT and PAT are expected to decline by 9% and 4% respectively on a year-on-year basis. The brokerage added that “muted technology spending in automotive and media is impacting near-term momentum” and that “margins, once a key strength for the business, are under pressure.”

Ahead of the results announcement, Tata Elxsi shares closed 2.2% higher at Rs 5,580 on the NSE. Despite the rebound, the stock remains down over 18% so far this year and is trading well below its 52-week high of Rs 8,027.

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