Shares of Tata Elxsi shot up 7.1% to ₹3,670.10 on October 14, extending a remarkable 22.5% climb from the ₹2,996 low hit just six sessions earlier. The catalyst: Q2 FY27 results announced on October 13 reported a robust year-on-year revenue growth of 15% . For a company that just a year ago was posting revenue declines, this is a notable inflection — but the picture is more nuanced than the stock price suggests.
Revenue Rebounds Across the Board, Erasing Last Year's Slump
Revenue from operations rose 15% to ₹1,055.66 crore from ₹918.10 crore a year ago . The transportation vertical grew 2% sequentially in constant-currency terms, media and communications recorded 3.4% growth, and healthcare grew 3.5% . This matters because in Q1 FY26, net profit had fallen 22% and revenue dropped 4% . The turnaround is real, but investors should note constant-currency growth was a more modest 2.3% quarter-on-quarter and 7.8% year-on-year , meaning some of the headline number reflects currency tailwinds rather than pure demand.
Margins Improved Even as the Company Paid Workers More
EBITDA came in at ₹231.4 crore with margins improving to 21.9%, and this margin expansion occurred despite salary revisions . Utilization — the share of billable hours — improved to 78%, with management indicating room to push toward 81–82% . That gap represents a lever to widen profits further without hiring. However, EBITDA margins of 21.9% remain far below the 26.3% the company posted in Q3 FY25, suggesting the efficiency gains still have a long way to go.
Net Profit Tells a Sobering Story
Net profit came in at ₹170 crore, a marginal drop of 0.2% from the previous quarter's ₹170.6 crore . Total expenses rose to ₹851.47 crore from ₹752.26 crore a year earlier — costs are growing almost as fast as revenue. Earnings per share ticked up to ₹27.34 from ₹24.85 , but the sequential stall signals that margin gains haven't yet translated into meaningfully higher profits.
A Strong Rally, but the Stock Is Still Down Nearly 40% from Its Peak
The stock remains well below its 52-week high of ₹5,950 . The P/E ratio recently stood at roughly 29.8x , a valuation that prices in a recovery but also demands continued acceleration. New deal wins in connected vehicles, generative AI assistants, and next-generation medical devices provide a credible pipeline, yet converting announcements into sustained double-digit growth will determine whether the current rally marks a genuine turning point — or a relief bounce off rock-bottom expectations.