1:1 Bonus, Rs 208/Sh Dividend: Tata's IT Stock Makes Investors Crorepati In 7 Yrs; Buy For Highest Rs 9,000 TP

Tata Group's one of the most expensive stocks in the IT sector, Tata Elxsi has been on a gaining spree for two consecutive trading sessions, and on Thursday it rose by over 2.4%. The stock has given 6.5% returns in 2 days, but in the long term, the stock multiplied investors' money and even made many crorepatis. In 7 years, Tata Elxsi's share has journeyed from Rs 740 levels to over Rs 8,190, and they're still undervalued compared to its record high levels. There is room for more upside as Prabhudas Lilladher at the latest recommended buying.

Tata Elxsi's Share Price:

On Thursday, April 4, 2024, Tata Elxsi's share price rallied by 2.42% to hit an intraday high of Rs 8,194.85 apiece. Its market cap is over Rs 50,200 crore.

Currently, Tata Elxsi is down by 11% from its 52-week high of Rs 9,191.10, but trading higher by 36.2% from its 52-week low of Rs 6,015.40 apiece. In six months, the stock is up 11%, while in a year, it has surged by 33%. In 5 years span alone, Tata Elxsi has skyrocketed by 738.5%.

But in 7 years, this gain is more merrier by a whopping 1,002%. 7 years ago, Tata Elxsi's share was at Rs 743.62 apiece on April 3, 2017. And the growth is multifold for three reasons more -- bonus shares, dividends, and the Covid-19 pandemic.

Tata Exlsi Bonus Shares Charm:

One of the many reasons why Tata Elxsi is expensive is because it has never carried a stock split. But has multiplied investors' portfolios through bonus shares.

Tata Elxsi has paid only one bonus share till now. It was in September 2017 when Tata Elxsi turned ex-bonus on the 18th of that month for a bonus issue in the ratio of 1:1. It meant Tata Elxsi paid 1 bonus share on every existing 1 share.

Example: If an investor held Tata Elxsi shares before September 18, 2017, let's say if you bought 100 shares of Tata Elxsi on April 3 of that year. Your investment in 1000 shares of Tata Elxsi would be around Rs 7,43,620 (1000 X Rs 743.62).

But after bonus shares allotment, your 1000 shares will receive another 1000 bonus shares. This will double your number of shares of Tata Elxsi to 2000 shares.

If you continue to stay invested up till now, your 2000 shares are now valued at Rs 1,63,89,700 or Rs 1.639 crore (2000 X Rs 8,194.85). On the all-time high price of Rs 9,191.10, your corpus would have been Rs 1.84 crore on 2000 shares.

It needs to be noted that this is just an example but gives a brief understanding of the growth in Tata Elxsi shares and the perks of bonus issue. Furthermore, the gains would have been higher if dividend payouts were included too.

Also, bonus shares were only allotted to those investors who held Tata Elxsi shares before the record date, which was

Tata Elxsi Dividend:

Since June 2001, Tata Elxsi has delivered up to 24 dividends, as per Trendlyne data. The highest dividend payout was Rs 60.60 dividends per share in 2023. However, since its bonus issue in 2017, the company has delivered as much as Rs 208.1 dividend per share in 7 years cumulatively.

On the current market price, Tata Elxsi's dividend yield is around 0.75%.

Tata Elxsi's Performance Since Covid:

Even if the investors who invested in Tata Elxsi after September 18, could not avail of the benefits and perks of bonus issue, they have seen a significant rise in their portfolio.

The lowest price level of Tata Elxsi in the last 7 years is Rs 501 per share on BSE which was recorded on March 25, 2020, the day when the first nationwide lockdown came into effect due to the Coronavirus pandemic.

From that level, Tata Elxsi's share has zoomed breathtakingly by 1,535.69% as of now. And added extra gains would come from dividends.

BUY Tata Elxsi Share:

There is still a buying opportunity in Tata Elxsi shares. In the near term, the stock is expected to rally by 10% ahead.

At the latest, Vaishali Parekh, Vice President - Technical Research at Prabhudas Lilladher said, "The stock has been in the consolidation phase for some time between the 7400 and 7900 levels, with good support maintained near the 7350 zone. Currently, hovering around the important 200 period MA of 7760, there is tough resistance near the 50EMA zone of 7840 which needs to be breached decisively for confirmation of further upward move."

Also, Parekh added that the RSI is well-placed and is on the rise, with the potential to rise further in the coming days.

Finally, Parekh added, "We suggest buying and accumulating this stock for an upside target of 8600-9000, keeping the stop loss near the 7200 level."

Tata Elxsi is a global design and technology services company headquartered in Bangalore. It addresses the healthcare, automotive, broadcast, and communications consumer electronics industries. This is supported by a network of design studios, development centers, and offices worldwide. With a comprehensive services and solutions portfolio, Tata Elxsi adds value at every stage of the customer's product development lifecycle.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor 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.