Tata Elxsi Shares in Focus Ahead of Q2 Results: What Investors Can Expect

Shares of Tata Elxsi are set to draw attention on Thursday as the company is expected to announce its second-quarter (Q2) results later in the evening. Here’s a breakdown of what analysts expect:

1. Revenue Growth Projections

• Analysts are forecasting high single-digit revenue growth for Tata Elxsi in Q2.
• Kotak Equities estimates an 8% growth in net sales, bringing the total revenue to Rs 956 crore for the September quarter.
• On a quarter-on-quarter basis, the company’s revenue is likely to rise by 3%.

2. Profit Estimates

• Net profit is expected to grow by 11% year-on-year, reaching Rs 223 crore, compared to Rs 200 crore from the previous year.
• Quarter-on-quarter, net profit is likely to jump by 21%.

3. Revenue Growth by Segment

• The company’s constant currency revenue growth is expected to be around 1.2% quarter-on-quarter, driven by:
  • Strong performance in transportation.
  • Stability in media and communications.
  • Decline in the healthcare and medical devices sector.

4. Key Drivers and Challenges

• The transportation segment is likely to perform well, driven by partnerships like Jaguar Land Rover (JLR), despite the challenges of reduced demand.
• Media and communications are expected to remain cautious on spending.
• The healthcare segment may see slower growth due to project reductions.

5. Margins and Operating Profit

• Analysts predict a decline in adjusted EBIT margins by 140 basis points compared to the previous quarter, mainly due to lower utilization rates and the impact of salary increases for junior employees.

6. Investor Focus

• Investors will closely monitor:
  1. Demand outlook for the Software Defined Vehicles (SDS) segment.
  2. Commentary on client engagements, particularly beyond JLR in the transportation sector.
  3. Reasons for slower deal ramp-up in the auto sector despite strong demand.
  4. Future expectations for the media and communications sector.

7. Previous Quarter Performance

• In the June quarter, Tata Elxsi reported:
  • A 3% decline in net profit to Rs 184 crore.
  • A 9% year-on-year revenue increase, bringing in Rs 926 crore from operations.
• The company had expressed optimism about growth opportunities in the automotive industry, particularly in software-defined vehicles.

8. Stock Performance

• On Wednesday, Tata Elxsi’s shares closed at Rs 7,629.75, up by 1.05% on the National Stock Exchange (NSE).

Investors will be watching closely for the company’s official results and updates regarding key growth areas.

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