Here's why the Tata Elxsi stock surged 10% today

After losses in two sucessive sessions, shares of Tata Elxsi  surged over 10% on Monday after the Tata group company announced a dividend of ₹75 per share. The stock price witnessed strong buying even after the design and technology service provider reported lower-than-expected earnings in the fourth quarter of FY25, which ended on March 31, 2025.

Earlier on Monday, Tata Elxsi shares opened 2% higher at ₹4,801 after ending 0.62% lower in the previous session. Extending its opening gains, the Tata group stock rallied as much as 10.2% to ₹5,399.05 on the BSE, while its market capitalisation climbed to more than ₹33,250 crore.

At the day’s high, the Tata Elxsi stock was up 17% from its 52-week low of ₹4,601.05 touched on April 7, 2025. The counter is down 40% from its 52-week high of ₹9,082.90 that it hit on August 27, 2024.

Tata Elxsi shares gained momentum today as investors rushed to buy the stock after the company announced its dividend payment. Last week, the company released its Q4 results and its board recommended a dividend of ₹75 per share, subject to its shareholders’ approval at the upcoming annual general Meeting.

The board of directors of Tata Elxsi has approved a final dividend of 750%, which equates to ₹75 per equity share with a par value of ₹10 each, for FY25. In the past 12 months, Tata Elxsi has declared an equity dividend amounting to ₹70 per share, while its dividend yield currently stands at 1.31%.

For Q4FY25, Tata Elxsi posted a 13.4% quarter-on-quarter fall in net profit at ₹172.4 crore, compared to ₹199 crore in the December quarter of FY25. The drop in bottom line was attributed to weak performance of the transportation sector, impacted by project pauses and competition to global auto OEMs from Chinese players.

The company's operating revenue dropped marginally to ₹908.3 crore in Q4FY25, from ₹939 crore reported in Q3FY25. Earnings before interest, tax, depreciation, and amortisation (Ebitda) stood at ₹207.7 crore, while the margin was at 22.9%.

After its Q4 results, some brokerages turned cautious on Tata Elxsi, with foreign brokerages Morgan Stanley and JP Morgan cutting the target price. Domestic brokerage house ICICI Securities has assigned a reduce call (revised from a sell call) on the stock.

While Morgan Stanley has maintained an underweight call on the stock with a reduced price target of ₹4,660, JP Morgan has also assigned an underweight rating at a price target of ₹4,400 per share.

On the other hand, ICICI Securities has largely maintained its estimates and tweaked the FY26E earnings per share (EPS) by 130 basis points on slightly better near-term visibility lent by large deals and optimism in healthcare-led demand. “Though new deals give some near-term respite, structural and macroeconomic issues loom large,” it said.

During the quarter under review, Tata Elxsi announced three large deal wins in automotive, media and communication, with entry in aerospace and defence. The company is also shifting towards emerging geographies such as Japan and India as demand in the European Union and the U.S. see a slowdown.

In Q4FY25, Europe was down 6.2% QoQ, marking the second consecutive quarter of quarterly contraction, while the U.S. market reported a negative growth of 1%. India held up well with 15.5% QoQ growth.

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