Weak automotive demand in Europe and delayed deal conversions constrain near-term growth, while Aerospace & Defence programmes remain two to three quarters away from making a meaningful contribution, Choice Institutional Equities said. Broad-based sequential growth and better-than-expected margins were encouraging, but uncertainty in the automotive segment continued, JM Financial said, citing risks to consensus estimates.
The deal pipeline provides visibility, but conversion and ramp-up remain key monitorables, MOFSL said, adding that European automotive demand is likely to remain a key growth constraint.
Demand across Europe remained subdued, with automotive engineering spending and deal closures affected by cautious customer spending and delayed decision-making. The US and India are expected to remain relatively supportive, while growth across other verticals and geographies should partly offset continued weakness in Europe, MOFSL said. The brokerage maintained its ‘Sell’ rating on the stock with a target price of Rs 2,970.
Choice maintained its ‘ADD’ rating on Tata Elxsi with an unchanged target price of Rs 3,520. Stronger transportation growth, European deal conversions and structural margin levers remain key catalysts, it said.
Sameer Pardikar of Mirae Asset Securities suggested a ‘Sell’ on the stock with a target price of Rs 3,020. Among other ‘Sell’ calls, Kawaljeet Saluja of Kotak Securities set a target price of Rs 3,200, while Pulkit Chawla of 360 ONE Capital set a lower target of Rs 2,840, the lowest on the Street following the Q2 results. Ravi Menon of Axis Capital has the highest target price so far, at Rs 4,950.
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