Shares of Tata Elxsi extended losses for the second session today after the firm announced earnings for the quarter ended September 2022. Revenue came below market expectations and some analysts were also of the view that the stock was overvalued. The Tata Group stock slipped 7.42 per cent intraday to Rs 7,201 against the previous close of Rs 7,778.35 on BSE. Tata Elxsi stock has lost 15 per cent or Rs 1,254.85 in the last two sessions, considering today’s intraday low of Rs 7,778.35 against the close of Rs 7,201 on October 14.
Total 0.84 lakh shares of the firm changed hands amounting to a turnover of Rs 62.24 crore on BSE. The market cap of the firm fell to Rs 45,005 crore today.
ALSO READ: Tata Elxsi shares fall over 8% as Q2 earnings disappoint Dalal Street
The stock hit its all-time high of Rs 10,760 on August 17, 2022 and a 52 week low of Rs 5,264.75 on November 29, 2021. The large cap stock was among the top losers on BSE today. Analysts are not enthused by the Q2 earnings and reduced their target price on stock with sell rating.
Geojit downgraded its previous rating on the stock from reduce to sell with a target price of Rs 7,524 (50x FY24E EPS).
“Supply side issues continue to be a problem in the near term to ramp up new projects. In addition, the company reiterated that global uncertainties in Europe are cautiously watched and the customers have shown some deferment in the new projects of communication and media. At the current market price, the stock is trading at 63 times on a one-year forward basis, which is expensive comparing to its historical average. Considering the near-term headwind on margins, we downgrade our previous rating from Reduce to Sell with a target price of Rs 7,524 (50x FY24E EPS),” the brokerage said.
ALSO READ: Tata Elxsi Q2 profit up 39%; revenues from operations at Rs 763.2 crore
Choice Broking in its earnings review said revenue came slightly lower than estimates at Rs 763 crore, a 5.1% growth sequentially and 28.2% growth YoY.
ALSO READ: Tata Elxsi’s growth story continues in Q2! Key takeaways from quarterly results
“Our revised estimates indicate Tata Elxsi will continue to grow rapidly with a revenue CAGR of 22.5 per cent over FY23-FY25E.). While we are confident about the growth of the company, we feel skeptical regarding company being able to maintain margins at a level that justifies current level of valuation. We have ascribed reduce rating with a DCF-based target price of Rs 7,963 implying a PE of 63 times on NTM EPS of Rs 125,” said the brokerage.
ICICI Securities has maintained its ‘sell’ call on the stock with a target of Rs 8,456. “We reduce our earnings per shares estimates by 4%/3% due to lowering of dollar revenue estimates (because of macro headwinds in the MCE vertical) and decrease in margin estimates. We like the company for its robust growth profile and industry leading margins. However, its super premium valuation of 65 times on FY24 EPS (123% /77% premium to LTTS/KPIT) drive our SELL rating. We value the firm at a target multiple of 40 times FY24E earnings to arrive at a fair value of Rs 5,173 (earlier: Rs 5,322),” said the brokerage.
Tata Elxsi reported a 28.2 per cent year-on-year (YoY) rise in its revenue from operations at Rs 763.2 crore on Monday. The employee strength crossed the 11,000 mark during Q2 with 1,532 net additions. Tata Elxsi’s earnings per share (EPS) grew 39 per cent to Rs 27.98.