As the third quarter result season officially kicks off today, Tata Elxsi Ltd is set to announce its earnings for the three months and nine-months ended on December 31, 2024. The Tata Group player will share its earnings later on Thursday.
Brokerage firms tracking the stock are expecting a mixed set of performance from the IT player, where it may report a decent growth on a year-on-year (YoY) basis, but margins are likely to remain under pressure. In fact, Tata Elxsi's bottomline may take a hit on a quarter-on-year (QoQ) basis, denting investors' sentiments.
HDFC Securities pegs Tata Elxsi's revenue at Rs 982 crore, up 2.9 per cent on a sequential basis and up 7.5 per cent on a yearly comparison. Ebitda for the quarter is seen at Rs 251 crore, rising 4.8 per cent YoY and 2.8 per cent QoQ, with Ebitda margins falling 125 bps on QoQ basis to 25.5 per cent. Adjusted PAT may come in at Rs 202 crore, down 12 per cent QoQ and 2 per cent YoY.
Ahead of its earnings, shares of Tata Elxsi opened marginally higher at Rs 6,541.35 on Thursday, commanding a total market capitalization close to Rs 41,000 crore. The scrip had settled at Rs 6,472.75 in the previous trading session. The stock is down 28 per cent from its 52-week high at Rs 9,082.90 hit in August 2024.
Kotak Institutional Equities sees Tata Elxsi's sales at Rs 952.2 crore in the December 2024 quarter, up 4.2 per cent YoY but flat on a sequential basis. Ebitda is seen at Rs 267.7 crore, flat on both YoY and QoQ basis, with Ebitda margins contracting 143 bps to 28.1 per cent. Adjust profit may dip 13.6 per cent QoQ and 4 per cent YoY to Rs 198.3 crore in the December 2024 quarter.
"We forecast revenue growth of 0.5 per cent c/c qoq, driven by an uptick in healthcare & medical devices, and expect muted trends in transportation vertical and media & communications. Transportation would be impacted by furloughs and moderating spend growth at top clients. Media clients remain cautious on incremental spends but some improvement in EM telecom clients should offset the weakness in media. TELX might lower its aspiration for 4QFY25. EBIT margin up by 20 bps qoq aided by marginal improvement in utilization," said Kotak.
Investor focus on overall demand outlook in SDS segment; commentary on engagements with clients other than JLR in transportation; outlook on R&D spends by automotive clients in CY2025; outlook of media & communications vertical; outlook on engagements with large clients in healthcare & medical devices vertical; (6) progress on scale-up of adjacencies in each of the three focus verticals, Kotak added.
Amid a forecast of muted set of numbers in the third quarter of ongoing financial year, Kotak Institutional Equities has a 'sell' rating on Tata Elxsi with a target price of Rs 5,600, while HDFC Securities has given the stock a 'reduce' rating with a target price of Rs 6,865.