Tata Elxsi’s stock saw a significant boost of 5% in early trading on Monday after the company released its Q4 financial results. The stock opened at ₹4801 on the Bombay Stock Exchange (BSE) and reached an intraday peak of ₹5171.50. This marked a gain of 5.5% compared to the previous day’s closing price of ₹4899.75. By noon, Tata Elxsi’s shares had climbed even higher, trading at ₹5289.50, up 7.95%.
This surge in the stock price came after Tata Elxsi announced its Q4 results from the previous week and revealed that its board had recommended a dividend of ₹75 per share.
Tata Elxsi’s Q4 Financial Performance
For the fourth quarter of FY25, Tata Elxsi reported a 13.4% drop in net profit, bringing it down to ₹172.4 crore compared to ₹199 crore in the previous quarter. This decline was primarily due to challenges in the company’s key transportation sector, which is currently struggling because of international trade issues and geopolitical tensions. The company’s operating revenue for the quarter stood at ₹908.3 crore. While this was slightly lower than the ₹939 crore reported in the previous quarter, it was similar to the ₹906 crore achieved in the same quarter of the previous year.
The company’s Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) for Q4 FY25 was ₹207.7 crore, with an EBITDA margin of 22.9%. Despite the fall in profits, the stock price continued to rise, likely due to investor optimism surrounding the dividend announcement.
Dividend Announcement
In addition to the Q4 results, Tata Elxsi’s board of directors proposed a final dividend of ₹75 per share, which is a generous 750% of the share’s par value of ₹10. This dividend will be paid for the financial year ending March 31, 2025, pending approval from the company’s shareholders at the upcoming Annual General Meeting (AGM).
Broker Reactions and Stock Outlook
While Tata Elxsi’s stock price rose, some analysts have expressed caution. Morgan Stanley has given the stock an “underweight” rating, lowering its price target to ₹4,660. The firm cited the Q4 earnings miss and warned that the earnings downgrade cycle may continue due to weak revenue growth and high stock valuations. Similarly, JP Morgan also has an “underweight” rating on the stock, lowering its price target to ₹4,400. They pointed out that this is the third consecutive quarter in which Tata Elxsi’s earnings missed expectations, particularly in terms of both revenue and margins.
ICICI Securities also reported disappointing Q4 results for Tata Elxsi and has changed its stance to a “reduce” rating (previously a “sell” recommendation)
In summary, while Tata Elxsi’s Q4 results showed a decline in profits, the stock price has risen thanks to a strong dividend announcement and potential for value buying. However, some analysts remain cautious, warning that challenges could persist in the coming quarters.
