Shares of Tata Elxsi saw a robust start on the NSE, opening 0.7 percent higher on October 18, following the announcement of its Q1FY24 results. The technology services company exhibited significant growth, trading at Rs 7,649 by 9:40 am, marking a 3 percent increase from the previous day’s close.
According to the regulatory filing, Tata Elxsi reported an impressive 5.9 percent growth in net profit and a substantial 14.8 percent rise on a yearly basis, amounting to Rs 200 crore for the quarter ending September 2023. The revenue also demonstrated positive trends, showing a 3.7 percent increase quarter-on-quarter and a notable 15.5 percent surge year-on-year, reaching Rs 881.7 crore.
The transportation segment experienced a remarkable 7.1 percent growth quarter-on-quarter, fueled by substantial deals and robust engagements in software-defined vehicle (SDV) projects. Similarly, the healthcare division showcased a steady 3.6 percent quarter-on-quarter growth, attributed to new product engineering, digital health initiatives, and regulatory services. Additionally, the media and communications segment reported marginal growth of 0.1 percent quarter-on-quarter.
Morgan Stanley’s Call on Tata Elxsi
Despite the upbeat performance, investment firm Morgan Stanley issued an ‘underweight’ call on Tata Elxsi’s stock, setting a target price of Rs 6,400 per share. The brokerage emphasized the need for strong execution in the coming quarters. It also pointed out that the company’s earnings per share (EPS) might face limitations in upward movement due to premium valuations, indicating a less favorable risk-reward scenario.
Nevertheless, Tata Elxsi’s stocks continued to rally, trading at ₹7,650.05 at 11:36 am, reflecting a 2.75 percent increase, as investors remained cautiously optimistic about the company’s future prospects.
