Six out of the Eight analysts that track Tata Elxsi continue to maintain an underweight rating on the stock. An underweight rating is equivalent to a sell recommendation.

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Tata Elxsi reported its June quarter results on Monday, during which it sounded cautious on the transport and media communications business. Both these businesses combined contributed to 85 percent of the company's overall topline.

Brokerage firm Morgan Stanley called the management commentary mixed with positives emerging from healthcare and concerns from media. Even though Tata Elxsi’s margins were resilient, but a higher tax rate leads to a cut in estimates, the brokerage stated.

The firm said that the year-to-date rally seen by the stock makes risk-reward unfavourable. Shares of Tata Elxsi have risen 20 percent on a year-to-date basis.

Morgan Stanley has an underweight rating on Tata Elxsi with a price target of Rs 5,700. The price target implies a potential downside of 26 percent from Monday's closing levels.

Similarly, JPMorgan has an underweight rating on Tata Elxsi with the lowest price target on the street at Rs 4,500, which implies a 40 percent downside from current levels.

The brokerage said that contrary to expectations, Tata Elxsi's EV business is not being able to aid its growth. The June quarter earnings missed revenue and margin expectations.

With 85 percent of Tata Elxsi's portfolio being under pressure, JPMorgan continues to sees challenges to the company's near-term growth. It does not expect the company to clock double-digit revenue growth in the current financial year.

For a stock that is trading at 53 times one-year forward price-to-earnings, JPMorgan called the valuation burden is excessive given the slowing growth.

The leading technology solutions provider for the automotive, media and healthcare segments on Monday reported 2.3 percent jump in net profit at Rs 188.9 crore for the June quarter compared to Rs 185 crore in the same period a year ago.

Total revenue of the company stood at Rs 850.3 crore during the period under review, up 17.1 percent compared to Rs 725.9 crore in the corresponding quarter in the previous fiscal.

Shares of Tata Elxsi ended 2.4 percent lower at Rs 7,535.