Multibagger stock rises 45% in two months, can the IT player extend gains?

Multibagger stock: Shares of Tata Elxsi have gained 45% from their 52-week low in two months. Tata Elxsi stock fell to a yearly low of Rs 4,601.50 on April 7, 2025. Amid the bull run, the multibagger stock has turned overbought on charts with a RSI of 75.1. The Tata Group stock had a high volatilty of 1.2 in the last one year. It has risen 645% in five years and gained 1,129% in ten years. 

In the current session, Tata Elxsi stock was trading 1.33% lower at Rs 6614.35 on BSE. Market cap of the firm fell to Rs 41,197 crore. Total 3384 shares of the firm changed hands amounting to a turnover of Rs 2.2 crore.

Kotak Equities has maintained 'sell' call on the stock amid high valuations. 

The brokerage expects a pickup in growth toward 2HFY26, with the ramp-up of large deal wins in auto. 

"TELX’s utilization has been impacted by significant volume build-up in anticipation of the ramp-up of large deals, which is likely to be gradual. Our estimates remain largely unchanged. We raise fair value to Rs 4,250 on roll-forward," said Kotak Equities. 

Gaurav Bissa, VP, InCred Equities said, "Tata Elxsi has witnessed a strong upside in recent times, which is in line with the performance seen in many of the IT names. The RSI at the current levels has entered in an overbought zone which makes buying lucrative on dips towards Rs 6350 levels where its 200dema is likely lend a strong support and price will also retest swing breakout making risk reward lucrative for a short term trade."

Ventura Securities has a price target of Rs 6,473 over the next 24 months on the IT stock.  

The brokerage expects near-term uncertainties, particularly in the automotive segment (contributes 54.2 per cent) and media and communications vertical (contributes 32.5 per cent) to hinder growth. 

"European OEMs face intensified competition from Chinese players, further complicated by China’s recent rare earth export restrictions, which impact the supply of critical materials needed for EVs. The M&C vertical is impacted by customer M&A activity leading to cautious R&D spending which pose challenges to fully realizing this potential in the short term," Ventura said. 

The domestic brokerage said these headwinds are further compounded by tariff uncertainty and the currency fluctuations risk, which could negatively influence the margin profile.

"Our assumptions are much ahead of Street expectations and despite building in bullish prospects, we believe that current valuations of 36.4 times FY28 earnings are stretched. We initiate coverage with a Sell for a price target of Rs 5,518 (31.0x FY28 P/E) representing a downside of 14.8 per cent from the current CMP of Rs 6,473 over the next 24 months," Ventura said on June 9. 

Om Mehra, Technical Research Analyst, SAMCO Securities said, "Tata Elxsi has reclaimed its 200-day simple moving average for the first time since entering a prolonged downtrend. The stock is following a classic higher-high, higher-low formation on the daily chart. The breakout above the horizontal trendline, coupled with strong follow-through in recent sessions, confirms renewed strength after months of underperformance. The 9 EMA and 20 EMA are both sloping upward and providing firm intraday support, while the daily Super trend indicator trails decent support. The RSI is placed at 68, reflecting strong momentum without yet entering an overheated zone. The MACD remains in bullish territory above the zero line. However, the histogram has started to narrow slightly, suggesting that a short-term pause or consolidation may occur after the recent run-up.

However, a pullback toward the Rs 6,500–Rs 6,400 zone, which aligns with both the horizontal breakout level and moving average supports, may provide an ideal entry opportunity for those waiting on the sidelines. The overall trend remains constructive, and as long as the stock holds above Rs 6,200, the setup remains favourable. As per the Fibonacci extension, the upside projections point toward Rs 6,900 in the near term, with a potential extension to Rs 7,250 in the coming weeks."

AR Ramachandran, SEBI-registered independent analyst says, "Tata Elxsi is bearish on the Daily charts & also overbought with strong resistance at Rs 6735. Investors should be booking profits as a Daily close below support of Rs 6,500 could lead to a target of Rs 6120 in the near term."

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.