1:1 Bonus Issue, 24 Dividends: Tata Group's 35-Year-Old Company Rises Over 700% In 5-Years: BUY OR SELL?

Tata Group-backed 35-year-old tech giant, Tata Elxsi gets a 'SELL' call from brokerage Kotak Institutional Equities. However, despite the latest profit-booking outlook, Tata Elxsi shares gained as much as 1% on March 26 before ending at Rs 7,687.65 which was marginally up. While Kotak calls for SELL, Prabhudas Lilladher expects more upside and has set a target price between Rs 8,000-9,000.

Kotak Institutional Equities Target On Tata Elxsi:

In its latest research note on March 26, Kotak's note said, "We cut FY2025-26E revenue and EPS estimates by 7-8%, as we bake in a slowdown across TELX's key verticals. Our analysis of automotive client spends indicates a continued focus on cost efficiency by Tier-1 suppliers. TELX derives nearly half of the revenues within the transportation vertical from Tier-1 suppliers."

Furthermore, the brokerage believes persisting weakness in media & communications might lead to growth declaration in FY2025E.

On the valuation, Kotak's note said, "Our Fair Value reduces to Rs5,400 (from Rs5,650) on moderated earnings, offset partly by rollover. Our DCF-based FV implies 32X FY2026E P/E. TELX has strong capabilities in embedded engineering and diversified presences in the medium term but has high exposure to top-5 clients and sub-scale presence at others. The company currently trades at 46X FY2026E, despite near-term headwinds. Retain SELL."

Prabhudas Lilladher Target Price On Tata Elxsi:

Tata Elxsi is among the latest pick of Prabhudas Lilladher.

Vaishali Parekh, Vice President - of Technical Research, at Prabhudas Lilladher said, "The RSI is well placed and is on the rise, with potential to rise further in the coming days. We suggest buying and accumulating this stock for an upside target of 8600-9000, keeping the stop loss near the 7200 level."

Tata Elxsi Share Price:

This Tata-backed IT stock is a multi-bagger and has surged significantly. On March 26th, the stock was at Rs 7,687.65 apiece. The stock's 52-week high and low is at Rs 9,191.10 and Rs 5,883.05 respectively.

In a year, Tata Elxsi shares gained by 29%, while in 5-years, the stock skyrocketed by nearly 703%.\

Tata Elxsi Dividend, Bonus Issues, Stock Splits:

As of now, Tata Elxsi is among the expensive stocks of Tata Group on a per-share basis. The stock has never carried stock splits up to date.

However, in 2017, Tata Elxs rewarded its investors with a bonus issue in the ratio of 1:1 in September of that year.

Additionally, in the last 12 months, Tata Elxsi has delivered hefty dividends up to Rs 60.60 per share. And it currently has a dividend yield of 0.8%. As per Trendlyne data, Tata Elxsi has paid up to 24 dividends since June 21, 2001.

Tata Elxsi's Earnings:

Tata Elxsi commenced its business on 5th May 1989 in Bangalore, the Silicon Valley of India, to develop and promote applications of electronics, embedded systems, and software. Now, Tata Elxsi is recognized as a premium engineering service provider worldwide and amongst the leaders in the automotive, media, broadcast, communications, and healthcare industries.

During Q3FY24, Tata Elxsi registered a net profit of Rs 206.4 crore in Q3FY24, registering a growth of 3.2% QoQ and 6% YoY. While revenue from operations stood at Rs 914.2 crore, up by 3.7% QoQ and 11.8% YoY.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.