Morgan Stanley has maintained an Underweight (UW) rating on Tata Elxsi, cutting the target price to ₹6,000 from ₹6,500, citing weak Q3 performance and limited growth visibility. Here’s a closer look at their key observations:
Key Highlights:
- Q3 Miss: Tata Elxsi’s F3QFY25 results fell short of expectations, disappointing on key performance metrics.
- Regional Weakness: The European transportation segment continues to struggle, with no significant recovery observed in Media and Healthcare verticals.
- Limited Growth Visibility: The brokerage highlighted that growth visibility remains limited, leading to potential downward revisions in consensus estimates.
- Valuation Concerns: High valuations combined with lackluster growth prospects may cause the stock to underperform in the near term.
Morgan Stanley’s Perspective:
With the challenges in European transportation and muted recovery in other key segments, Morgan Stanley remains cautious on Tata Elxsi’s prospects. They expect the stock to underperform due to limited growth visibility and the likelihood of downward revisions to estimates.
Valuation and CMP:
- Target Price: ₹6,000 (revised from ₹6,500).
- Current Market Price (CMP): ₹6,451.95.
This implies a downside potential of approximately 7% from the CMP, reinforcing Morgan Stanley’s cautious stance on the stock
