Shares of Tata Elxsi fell 1.5% on Friday after the design and technology company reported a weaker second quarter. 

Net profit for the July–September period (Q2 FY26) fell 32.5% year-on-year to ₹154.82 crore from ₹229.43 crore, while revenue from operations declined nearly 4% to ₹918.10 crore.

On a brighter note, sequential numbers showed some improvement. Revenue rose 2.9% from the previous quarter, and the company's PAT margin widened by 50 basis points to 16%. EBITDA came in at ₹193.3 crore, with margins steady at 21.1%.

Earnings Review

SEBI-registered analyst Deepak Pal said Tata Elxsi's performance, though mixed, continues to inspire confidence among investors thanks to its strong recovery and long-term consistency. 

He described the company as one that has weathered short-term headwinds well and still stands out for its fundamentals.

On the latest results, Pal said the September-quarter performance showed pressure on profitability, mainly because of a slowdown in the auto sector. However, he pointed out that growth in other areas helped cushion the impact as U.S. revenue rose 7.9% sequentially, while the media and communication segment grew 6.8%. 

The transportation segment remained stable, and management commentary pointed to steady operations across core areas.

Technical Breakdown

Pal noted that the stock, currently around ₹5,573, has rebounded strongly after a sharp correction earlier in the year. The recent two-day uptrend, marked by strong green candles, suggests renewed buying interest.

He said the stock is hovering around its 20-day and 50-day moving averages at ₹5,465 and ₹5,625 respectively, and that a close above ₹5,625 could signal a further rally. The RSI is at 47, rising from oversold territory, while the stochastic relative strength index (RSI) indicates an uptrend. 

Support is seen around ₹5,353 and ₹5,465, and resistance near ₹5,560, ₹5,659, and ₹5,766. Pal added that a breakout above the ₹5,560–₹5,660 range could confirm the next leg of the upmove.

Fundamental View

Pal said that at first glance, Tata Elxsi appears to be very expensive, and it trades at about 45 times earnings and 12.6 times book value. But, he said, the company has delivered on that valuation through long-term consistent growth. 

Over the past 10 years, it has grown sales at a compound annual rate of 15.5% and profit at 26.4%, while remaining nearly debt-free and generating a return on equity of 34%.

He noted the company's strong cash position and regular dividend payments provide flexibility to invest for growth and navigate through weaker cycles.

Outlook

Pal said Tata Elxsi's recent profit slump mirrors broader weakness in global auto demand, but he expects medium-term support from the company's growing presence in media-tech and design services.

He added that upcoming global auto trends and large deal wins, especially in design, media, and automotive software, could shape the company's next phase of growth. 

With new opportunities emerging in AI, software-defined vehicles, streaming, and OTT services, he said Tata Elxsi remains well placed for the long run despite short-term volatility.

What Is The Retail Mood?

On Stocktwits, retail sentiment was 'bullish' amid 'high' message volume.

Tata Elxsi's stock has declined 19% so far in 2025.

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