By Malvika Gurung
Investing.com -- Shares of the leading design and technology services provider Tata Elxsi (NS: TTEX ) plunged over 8% on Monday and ended the session 8.04% lower at Rs 7,784.7 apiece after posting lower sequential profit figures for the September ending quarter.
The Tata Group company’s net profit declined 5.65% to Rs 174.28 crore in Q2FY23 compared to Q1, while PBT slipped 4% to Rs 219.17 crore and EBITDA declined 5% to Rs 226.5 crore in the quarter under focus.
The firm’s CEO and MD, Manoj Raghavan said that the company registered steady growth in the quarter despite macro-economic uncertainty and currency headwinds in its key markets.
However, the domestic brokerage ICICI Securities (NS: ICCI ) has slashed its EPS estimates on Tata Elxsi by 4%/3% due to reducing USD revenue estimates and a fall in margin estimates.
“Its super premium valuation of 65x on FY24 EPS drives our SELL rating," stated the brokerage, estimating a fair value of Rs 5,173/share.
Morgan Stanley (NYSE: MS ) sees medium-term risks on the company’s margin and premium valuations, keeping an underweight call on the stock at a target price of Rs 5,800, a downside of 25.5% compared to Monday’s closing price.
Choice Broking stated that even though it remains confident about the growth of the company, it feels sceptical that it would be able to maintain margins at a level that justifies the current level of valuation.
It has a reduce rating on the stock with a target price of Rs 7,963.
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