Shares of Tata Elxsi are down over 15 percent for 2024 so far.
At 9.15am, the shares of Tata Elxsi were trading at Rs 7,120 on the NSE.
The brokerage feels good commentary from the management may not be enough for Tata Elxsi, given the the burden of higher expectations and steep valuations of the stock.
Morgan Stanley also slashed its earnings-per-stock targets for Tata Elxsi by 3.9 percent and 5.4 percent for FY25 and FY26 to factor in the miss in earnings.
Kotak Institutional Equities also cut their EPS estimates for Tata Elxsi by 2-4 percent following another disappointing quarter.
Shares of Tata Elxsi are down over 15 percent for 2024 so far.
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Shares of Tata Elxsi plunged 5 percent in early trade on April 24 after the company reported a decline in both net profit and revenue for the January-March quarter.
At 9.15am, the shares of Tata Elxsi were trading at Rs 7,120 on the NSE.
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The company's net profit for the March quarter fell 4.6 percent on-quarter to Rs 196.93 crore from Rs 206.4 crore clocked in the October-December period of FY24. The bottomline was also 2.32 percent lower than the Rs 201.5 crore recorded a year back.
Total revenue from operations came at Rs 905.9 crore in Q4 of FY24, down 1 percent from Rs 914.23 crore reported in the previous quarter, but higher than Rs 837.91 crore seen a year ago.
However, the EBIT margin expanded to 25.8 percent in Q4, compared to 26.8 percent in the preceding quarter on account of operational efficiencies.
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Brokerage firm Morgan Stanley regarded the company's Q4 show as a miss but highlighted the management's constructive view on revenue growth in FY25. The brokerage feels good commentary from the management may not be enough for Tata Elxsi, given the the burden of higher expectations and steep valuations of the stock.
Morgan Stanley also slashed its earnings-per-stock targets for Tata Elxsi by 3.9 percent and 5.4 percent for FY25 and FY26 to factor in the miss in earnings.
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The brokerage has an 'underweight' call on the stock with a price target of Rs 6,860. Morgan Stanley's target price for the stock reflects a downside potential of over 7 percent in the counter.
Kotak Institutional Equities also cut their EPS estimates for Tata Elxsi by 2-4 percent following another disappointing quarter. Even though Kotak sees the company's high exposure to embedded and digital engineering as a positive, it also highlights the risks due to the increasing dependence on top-5 clients. The brokerage also took into account that Tata Elxsi's performance was adversely impacted in the past due to its high exposure to Jaguar Land Rover.
Kotak maintains a 'sell' call on the stock with a price target of Rs 5,400.
Also Read | Tata Elxsi Q4 net profit, revenue decline QoQ; firm declares dividend of Rs 70 per share
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