Tata Elxsi shares shed multibagger tag; time to buy, sell or hold?

Shares of Tata Elxsi are trading 40% lower from their 52-week high of Rs 10,760 hit on August 17, 2022. However, the Tata Group stock was a multibagger rising 818% during the last three years. Tata Elxsi stock has lost 23.71% in the last one year. The large cap stock hit a 52-week low of Rs 5708.10 on December 26, 2022. In the current trading session, Tata Elxsi stock was trading marginally higher at Rs 6448.65 against the previous close of Rs 6376.90 on BSE.  The Tata Group stock hit an intraday high of Rs 6448.65 on BSE. Total 7330 shares of the firm changed hands amounting to a turnover of Rs 4.69 crore on BSE. The market cap of the firm rose to Rs 40,010 crore today.

In terms of technicals, the relative strength index (RSI) of Tata Elxsi stands at 63, signaling it's trading neither in the overbought nor in the oversold zone. Tata Elxsi stock has a one-year beta of 0.8, indicating very low volatility during the period. Tata Elxsi shares are trading higher than the 5 day, 20 day and 50 day moving averages but lower than 100 day and 200 day moving averages.

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher said, "Tata Elxsi has underperformed in the last 6 months and almost corrected 50% from all-time highs of 10,800 levels to Rs 5700 in this period. After a long correction, the stock has taken a support near Rs 5700, making a double bottom formation on the daily chart, and has strongly recovered from thereon near the 50-day moving average, which is around the Rs 6,350 level. A decisive close above Rs 6800 levels will see the stock move towards the 200 DMA, which is at Rs 7400 levels. The RSI indicator has also recovered from its oversold zone and reversed its trend recently to signal a positive bias. We suggest buying and accumulating this stock for an upside target of Rs 7000-7400, keeping the stop loss near the Rs 5800 level."

Abhijeet from Tips2trades is also bullish on the stock. "After a brutal but much needed price correction, Tata Elxsi looks bullish on the Daily charts with strong resistance at Rs 6510. Investors should buy only if price dips closer to support of Rs 6045 to buy for a target of Rs 6510-6700 in the near term," he said.

Osho Krishan, Sr. Analyst - Technical & Derivative Research, Angel One said, "The stock is in a corrective phase and is hovering way below the 200 SMA on the daily chart, indicating inherent weakness. On the technical front, the immediate resistance is placed around the Rs 6600-6700 zone, and an authoritative breach could only provide some relief in the near term. On the lower side, the support is placed around Rs 6100, followed by the immediate swing low of Rs 5900-odd zone in the comparable period."

In the third quarter of the previous fiscal, the design led technology service provider logged a 29% rise in net profit to Rs 194.68 crore on 28.7% increase in revenue from operations to Rs 817.74 crore on a year-on-year basis.

Net profit rose 11.71% while revenue from operations climbed 7.15%, respectively, over Q2 FY23 (QoQ). Profit before tax (PBT) stood at Rs 240.10 crore, logging a growth of 9.55% QoQ and 20% YoY.

EBITDA stood at Rs 246.9 crore in Q3 (up 9% QoQ and up 17.1% YoY). EBITDA margin was at 30.2% in Q3 FY23 as compared to 29.7% in Q2 FY23 and 33.2% posted in Q3 FY22.

Tata Elxsi is a subsidiary of Tata Sons, holding company of the Tata Group. It provides design and technology services across industries including automotive, broadcast, communications, healthcare, and transportation. The company aims to help customers reimagine their products and services through design thinking and the application of digital technologies such as IoT (Internet of Things), cloud, mobility, virtual reality and artificial intelligence.

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