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This Tata Group stock rallies 104% from 52-week low, how far can it go?

This Tata Group stock rallies 104% from 52-week low, how far can it go?

Tata Elxsi stock, which hit a 52-week low of Rs 4,112 on August 11, 2021, is currently trading at Rs 8,418 , translating into a rally of 104 per cent in nearly one year.

Tata Elxsi said its net profit climbed 63 per cent to Rs 184.72 crore for the quarter ended June against Rs 113.38 crore in the corresponding quarter of the previous fiscal. Tata Elxsi said its net profit climbed 63 per cent to Rs 184.72 crore for the quarter ended June against Rs 113.38 crore in the corresponding quarter of the previous fiscal.

Shares of Tata Elxsi have risen over 100 per cent from their 52-week low despite highly volatile domestic market affected by negative global cues. A fall in global markets along with rising inflation has also affected sentiment around Indian stocks in a year.

The stock of the Tata Group firm, which hit a 52-week low of Rs 4,112 on August 11, 2021, is currently trading at Rs 8,418 , translating into a rally of 104 per cent in nearly one year. Tata Elxsi stock hit a 52-week high of Rs 9,420 on March 31, 2022.

Shareholders' Details

In Q1 of the current fiscal, 4,60,564 public shareholders held a 56.08 per cent stake or 3.49 crore shares in the firm.

Two promoters held 43.92 per cent stake or 2.73 crore shares in the last quarter. 4,44,299 public shareholders held 1.87 crore shares of the firm, amounting to a stake of 30.05 per cent with an individual share capital of up to Rs 2 lakh.

28 public shareholders held 12.31 lakh shares of the firm, amounting to a stake of 1.98 per cent with an individual share capital of over Rs 2 lakh. 521 foreign portfolio investors (FPIs) held 15.17 per cent stake or 94.46 lakh shares in the firm in Q1.

Strong Q1 show

On July 14 this year, Tata Elxsi said its net profit climbed 63 per cent to Rs 184.72 crore for the quarter ended June against Rs 113.38 crore in the corresponding quarter of the previous fiscal.

ALSO READ: Tata Elxsi stock hits all-time high in volatile trade; here's why

Net sales gained 30.1 per cent to Rs 725.89 crore in the June 2022 quarter against Rs 558.32 crore in June 2021 quarter. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) climbed 48.35 per cent to Rs 248.47 crore in the last quarter from Rs 167.49 crore in the June 2021 quarter.

Earnings per share (EPS) rose to Rs 29.66 in June 2022 quarter from Rs 18.21 in June 2021 quarter. The company said it crossed 10,000 employee mark with 771 net additions in the quarter.

ALSO READ: Tata Motors shares trading flat ahead of Q1 earnings, here's what to expect

 Intraday trade

Meanwhile, Tata Elxsi stock touched an intraday high of Rs 8,460 against the previous close of Rs 8,362 on BSE today. It also touched an intraday low of Rs 8,341 on BSE.

Shares of Tata Elxsi were trading higher than the 5-day, 20-day, 50-day, 100-day and 200-day moving averages.

ALSO READ: Tata Elxsi, Lenovo partner to offer XR solutions, metaverse as service

Total 7,548 shares of the firm changed hands amounting to a turnover of Rs 6.34 crore on BSE. The market cap of the firm stood at Rs 52,424 crore on BSE.

The stock has zoomed 101 per cent in a year and gained 43.52 per cent in 2022. In a month, the stock has gained 5.35 per cent. On the other hand, Sensex has gained merely 5.7 per cent in a year and fallen 4.6 per cent since the beginning of this year. In a month, the 30-stock index has gained 4.54 per cent.

Tata Elxsi is among the leading providers of design and technology services across industries including automotive, broadcast, communications, healthcare and transportation.

Experts' Take

Here's a look at what analysts said on the outlook of the Tata Elxsi stock.

Manoj Dalmia, founder and director, Proficient Equities

"Tata Elxsi might see some selling pressure in the short term, although a temporary rise is seen. We can see levels up to Rs 8,076 in the near term and if further selling pressure is seen it might reach its 200-day exponential moving averages at Rs 7,093. Outlook is slightly bearish as there is some uncertainty around inflation concerns globally, which can involve some FII selling and margin reduction."

Ravi Singh, vice president and head of research, Share India

"Tata Elxsi stock is witnessing lower level buying and accumulation. The surge in volumes has pushed the prices higher and increased the volatility. The current momentum is well supported on technical setup as most of the trend indicators are reflecting a strong up move ahead in daily and intraday chart. Tata Elxsi share price will maintain this tempo to touch the levels of Rs 8,750 in a 4 - 6 months."

AR Ramachandran, Co-founder & Trainer, Tips2Trades

"Despite stellar Q1FY23 results and a consistent and phenomenal uptrend witnessed in this stock since the past two years, we believe, it is time to turn cautious and start booking profits in this stock. Very high valuations compared to its peer group with hardly any decent correction in the stock price coupled with major economic headwinds to be faced in Europe and US, which contribute a huge chunk of revenue could lead to its downfall. Investors should use the current uptrend to keep booking profits or keep a stop loss of Rs 8,040. Major resistance will be at Rs 8,820."

Tirthankar Das, Head of Technical Research, Ashika Group

"The share price of Tata Elxsi has been moving higher after forming a strong base above 100 DMA. The breakout from triangular consolidation pattern confirms resumption of up trend that augurs well for the next leg of up move thus, offering fresh entry opportunity. Key observation is that the stock has taken support from the rising trendline for multiple number of times and signifies buying demand at elevated support base. Hence, it can be expected that the stock to maintain its up-move and head initially towards Rs 9,400 (Apr 2022 swing high) followed by  Rs 10,125 (123.6% projected retracement) and beyond due to the strong bullish structural formation. Amongst momentum oscillators, 14-period RSI is trending up in neutral price region also supportive of our bullish stance."

Rajesh Sinha, senior research analyst at Bonanza Portfolio

"Tata Elxsi has consistently delivered industry leading growth since the pandemic, driven by its exposure to fast-growing Electric, Autonomous and Connected technologies in the Automotive vertical; platform-led deals and client mining in Media, Broadcast and Communication vertical; and investments in adjacencies like Pharma in the Healthcare vertical. Tata Elxsi's business outlook continues to be solid considering company's robust order book, strong execution capabilities with top notch operational efficiency. Tata Elxsi is focused to remain on expanding its marquee client base as well as winning longer strategic deals with its key clients. This, we believe will help it de-risk its business and reduce volatility going ahead. Tata Elxsi's offshore revenue mix has historically been higher than peers at 60%. The gap has widened further during the pandemic with Tata Elxsi currently operating at 75% offshore revenue mix against LTTS (59%) and Cyient (51%). The higher offshore revenue mix helps Tata Elxsi enjoy industry leading EBIT margins at 30 in Q4FY22. We believe that the sharp margin expansion of 10 percentage points that Tata Elxsi has seen since the pandemic is partly driven by structural factors like higher offshoring, higher utilization and focus on larger more profitable deals and partly by factors like lower discretionary expenses like travel and sales & marketing. Tata Elxsi, a pure-play ER&D service companies in India, is expected to report double digit revenue growth led by its exposure to fast growing verticals like auto, media & communications and healthcare; addition of marquee clients and large deal wins with existing clients."

Published on: Jul 27, 2022, 1:08 PM IST
Posted by: Aseem Thapliyal, Jul 27, 2022, 12:57 PM IST