Tata Elxsi Stock Surges Over 2% Ahead of Q2 Results - What's Fueling The Rally

Tata Elxsi Share Price: The share price of Tata Elxsi Ltd. rose over 2 per cent in trade on Thursday, October 9, 2025 to hit an intra-day high of Rs 5,606.95 apiece amid a temporary truce being achieved among the top echelons of Tata Trusts and ahead of its Q2 earnings report.

The ‘temporary truce’ has been achieved within the $350 billion Tata Group, as per sources told Arnab Goswami, Editor-in-Chief of Republic Media Network.

"Tata Elxsi offers a strong long-term investment opportunity across its key verticals, despite current macroeconomic headwinds. The transportation segment is showing recovery signs, particularly with the stabilization of the JLR account and strategic wins, with OEMs such as Mercedes-Benz, Suzuki, and a European player, including a USD 50mn deal," according to an Institutional Research report.

Further, the brokerage house mentioned, "We expect TELX to deliver revenue/EPS CAGR of 10/12% over FY25-28E vs 5Y CAGR of 14/24%. We upgrade TELX to ADD (earlier REDUCE) with a revised P/E multiple to 35x (~32x earlier) and a target price of INR 5,700, based on 35x Sep-27E EPS. The stock is trading at a P/E of 36/31x FY27/28E (10Y average at 36x)."

Tata Elxsi’s transportation vertical, especially automotive, is showing signs of stabilization despite macroeconomic headwinds, with the stability of the JLR account being a key relief, it maintained.

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The company is actively ramping up several strategic deals, including major engagements with Mercedes, Suzuki, and a USD 50 million European OEM, all of which are expected to fuel growth in the coming quarters.

However, its media and communication vertical is under pressure due to weak industry fundamentals, with heavy capex in network modernization (5G, fibre replacement) not translating into subscriber or revenue growth, as investments focus more on retention than new income.

On the other hand, its "Suzuki partnership, now expanded with a second centre focused on Software Defined Vehicles (SDV), reflects the company’s advanced work in Hybrids and EVs. A notable shift in revenue mix from tier 1 suppliers to OEMs—now at 70/30% mix compared to the reverse three years ago—offers greater predictability and is expected to move toward an 80/20% split.

Beyond automotive, the company is making calculated bets in aerospace and defense, focusing on emerging areas like UAVs and drones, with deals such as Garuda and HAL’s CAD Warrior. While off-highway, off-road, and rail contribute around 7.5–8% of revenue, the primary focus remains on scaling OEM-led automotive growth.