Tata Elxsi Limited

Technology — Software - Application · NSE

₹3,850.10+₹150.10 (+4.06%)

DalalBaazaar Score

59 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

Moderate

Driven by high debt relative to equity, small-cap size, which brings sharper price swings.

In simple words: Strong business and financial position, with both sales and profits growing well. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:49 pm

Understanding the Business

Company site ↗

The 60-second version of Tata Elxsi Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Tata Elxsi Limited provides product design and engineering, systems integration, and support services in India, the United States, Europe, and Internationally. The company operates through two segments, Systems Integration and Support, and Software Development and Services.

IndustrySoftware - Application

SectorTechnology

Employees11,046

Annual revenue₹3,757 Cr

How does it make money?

Turns over ₹3,757 Cr a year. Of every ₹100 of sales, about ₹17 reaches shareholders as profit, with ₹28 left at the operating level before interest, tax and depreciation. Each of its 11,046 employees supports ₹34.0 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹34.0 lakh

Who are its competitors?

The closest listed comparisons in its industry are TATA CONSULTANCY SERV LT, INFOSYS LIMITED, HCL TECHNOLOGIES LTD, WIPRO LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 26.2%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 23.9% against a peer median of 32.0% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

Peer median ROE32.0%

What is the outlook?

15 analysts covering the stock expect revenue to grow about 9.9% and earnings to grow about 19.1% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+9.9%

Est. earnings growth+19.1%

Analysts15

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +19% while net margin moved -30% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+19%

Margin effect-30%

DalalBaazaar Score

59/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue CAGR of only 6.1% — barely ahead of inflation
✗ Profit has declined at 5.9% a year
✗ Profit is compounding slower than revenue — margins are being squeezed as the business grows

Quality vs. Valuation

Company Quality

60/ 100

Average

How good the business is, ignoring the share price entirely.

Valuation

41/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

35.8x

3Y Median

49.6x

40 monthly readings · mean 48.6x · range 29.1x–72.2x

Sector Median

16.5x

median of 4 sector peers

🟢Current valuation is approximately 28% below its 3y median of 49.6x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

⚠️Against its sector it trades 116% above the peer median of 16.5x.

vs. its own history

Cheap

49.6x median over 40 months · -28%

vs. sector peers

Expensive

16.5x median of 4 peers · +116%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

23.0x

PEG

3.58

What's Good / What's Bad

🟢 What's Going Well4

Debt is being paid down
Total debt is down 11% over 3 years.
Cash generation is improving
Free cash flow is up 55% over 3 years.
High return on capital employed
ROCE of 26.2% is the mark of a business that converts capital into profit efficiently.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 36.2% to 20.7% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 41.7% to 26.2% — often a sign of competition or overexpansion.

Red Flags

2 items require attention · 2 high

🔴High leverageFinancial
Debt/Equity of 4.90x — earnings must service borrowings before shareholders see anything.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 5.3 points, from 33.0% to 27.7%.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 26.2% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Priced below its own history
The stock trades 28% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 33.0% to 27.7%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Leverage amplifies any setback
Debt/Equity of 4.90x. Interest is payable whether or not the business has a good year.
A premium to the sector to defend
It trades 116% above the peer median. That premium needs a reason that persists, or it closes.
Growth barely outpaces inflation
Revenue compounding at 6.1% a year is close to the rate prices rise, so the business is gaining little ground in real terms. That leaves the share price dependent on a re-rating rather than on earnings growth.
Returns on shareholder capital are falling
ROE has dropped from 36.2% to 20.7%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 26%✓ 27.7%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Revenue growth stays above 5% a year✓ 6.1% CAGR
Latest reported year was 15.0%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
3Free cash flow remains positive✓ ₹653 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.2x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 23%✓ 26.2%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

10 / 12 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

6 good · 3 neutral · 2 weak

Market Cap

₹23,986 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

35.8x

Fair

Fairly valued against the generic band

P/B Ratio

8.23x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹107.57

Profitable

Profitable on a per-share basis

ROE

23.9%

Strong

Strong capital efficiency

ROCE

26.2%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

4.90x

High

High leverage

Revenue Growth (YoY)

15.0%

Healthy

Healthy top-line growth

Profit Growth (YoY)

10.0%

Healthy

Profits growing at a healthy clip

Dividend Yield

1.95%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹723 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

P/E (Forward)

27.0x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

ROA

14.5%

Good

Assets are working hard

Operating Margin

19.7%

Good

Healthy core-business profitability

Net Margin

16.6%

Good

Strong bottom-line conversion

Current Ratio

3.75

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.38

Defensive

Steadier than the market

52W Range Position

29%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

3260.2 / 3472.9

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

79.4

Overbought zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹3,145 Cr	₹3,552 Cr	₹3,729 Cr	₹3,757 Cr	+6.1%
EBITDA	₹1,038 Cr	₹1,167 Cr	₹1,153 Cr	₹1,040 Cr	+0.1%
EBITDA Margin	33.0%	32.9%	30.9%	27.7%	—
PAT (Net Profit)	₹755 Cr	₹792 Cr	₹785 Cr	₹628 Cr	-5.9%
EPS	₹121.26	₹127.18	₹126.01	₹100.89	-5.9%
ROE	36.2%	31.6%	27.4%	20.7%	—
ROCE	41.7%	39.0%	34.3%	26.2%	—
Total Debt	₹182 Cr	₹224 Cr	₹192 Cr	₹162 Cr	-3.8%
Free Cash Flow	₹423 Cr	₹618 Cr	₹796 Cr	₹653 Cr	+15.6%

🟢 Revenue has grown at 6.1% a year over 3 years.

🟡 EBITDA has been broadly flat over 3 years (0.1% a year).

🔴 EBITDA Margin has fallen from 33.0% to 27.7% over 3 years (-5.3 pts).

🔴 PAT (Net Profit) has shrunk at 5.9% a year over 3 years.

🔴 EPS has shrunk at 5.9% a year over 3 years.

🔴 ROE has fallen from 36.2% to 20.7% over 3 years (-15.5 pts).

🔴 ROCE has fallen from 41.7% to 26.2% over 3 years (-15.5 pts).

🟢 Total Debt has shrunk at 3.8% a year over 3 years.

🟢 Free Cash Flow has grown at 15.6% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹3,963 Cr

Total Liabilities

₹921 Cr

Cash & Equivalents

₹194 Cr

Operating Cash Flow

₹664 Cr

Capex

-₹11 Cr

Shareholding (proxy)

Institutional Holding

14.4%

Insider Holding

44.8%

Corporate Actions

Next Earnings

12 Jan 2027

Dividend Rate

₹75

Ex-Dividend Date

10 Jun 2026

Analyst Consensus

Recommendations

8 Buy · 2 Hold · 6 Sell

Target Price (Mean)

₹3,663.06

-4.9% vs CMP

Target Range

₹2,840 – ₹5,135

Peer Comparison

Company	P/E	ROE
TATA CONSULTANCY SERV LT	17.3x	45.6%
INFOSYS LIMITED	15.8x	32.0%
HCL TECHNOLOGIES LTD	20.4x	24.6%
WIPRO LTD	14.5x	15.9%

Recent News

1 positive4 mixed1 general

Tata Elxsi (NSEI:TATAELXSI) Stock Forecast & Analyst Predictions

Simply Wall Street, 15 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Tata Elxsi Q1 revenue rises 14.5%, margins dip on transition costs

scanx.trade, 15 OctResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Result Review Tata Elxsi Futures: - Overall strong results - Profit flat due to tax adjustments - Only problem stock ran 5% yesterday and 11% in one week - Buy near support levels - Support Level 3340, Higher Level 3550 #TataElxsi #TataElxsiResults #ResultR

Facebook, 14 OctResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Tata Elxsi shares jump over 7% reacting to Q2 results beat; Majority analysts still cautious

CNBC TV18, 14 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Where Could Tata Elxsi Share Price Potentially Be in the Next 5 Years?

Equitymaster, 14 Oct

Tata Elxsi Shares Soar More Than 7% After Q2 Results Meet Expectations

NDTV Profit, 14 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in overbought territory — momentum entries here carry more short-term pullback risk.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Profitability

MiddlingValuation · Risk

WeakGrowth

Points for each in the Score ↑

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you. 2 high-severity red flags sit above this conclusion and should be read first.

All 5 tripwires holding · see Key things to watch ↑