1:1 Bonus, Rs 60.60/Sh Dividend: Tata's IT Stock To Rise By Rs 1,100 Ahead; Dividend Announcement On April 23

Tata Group-backed 35-year-old midcap tech company, Tata Elxsi is in focus ahead of its Q4 results and dividend recommendations. This Tata Group IT player has carried 1 bonus and delivered 24 dividends with the highest being Rs 60.60 per share last year. Tata Elxsi is coming up with more rewards. And ahead of Q4, there is an opportunity to fetch short-term gains in the stock.

Axis Securities has maintained its short-term buying call on Tata Elxsi for quite some time now. The stock is still below the Rs 7,800 level, giving a better opportunity to buy for a target of Rs 8,850 which is expected to be achieved in the coming days. It will be keenly watched, if Tata Elxsi shares see the big jump during its Q4 results and new dividend recommendation announcement on April 23.

According to Axis Securities, the buying entry in Tata Elxsi shares is between Rs 7,720 to Rs 7,828. The target is set at Rs 8,850 apiece, while its stop loss is set at Rs 7,627 apiece. This is a 30-day target call!

That being said, there is potential for over 14% upside in Tata Elxsi. In rupee terms, the potential rise is as high as Rs 1,097.35 per share in the coming days compared to the CMP.

Currently, Tata Elxsi's share price is at Rs 7752.65 apiece on BSE with a market cap of Rs 48,280.74 crore. The stock's 52-week high and low is at Rs 9,191.10 and Rs 6,186 respectively.

So far, in 2024, Tata Elxsi shares have corrected sharply, falling by at least 11.4% on BSE. But in a year, its upside is around 23%, while its 5-year gains are to the tune of a whopping 741% on BSE.

The next big event in Tata Elxsi is the quarterly and full-year earnings report for FY24, alongside dividend recommendations.

In its regulatory filing, Tata Elxi share said, "A meeting of the Board of Directors of Tata Elxsi Limited ('the Company') will be held on Tuesday, April 23, 2024, inter alia, to consider:

- The Audited Financial Results of the Company for the quarter and year ended March 31, 2024.

- Recommend dividend if any, on the equity shares of the Company for FY 2023-24."

During the third quarter of FY24, Tata Elxsi earned a net profit of Rs 206.4 crore, 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.

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.

Coming to the bonus issue, 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.

Among its fundamentals, Trendlyne data highlighted:

- Stock Price rose 21.59% and underperformed its sector by 23.4% in the past year.

- Debt to Equity Ratio is zero as the company is debt-free.

- Mutual Fund Holding decreased by 0.89% in the last quarter to 1.81.

- Interest Coverage Ratio is 63.9, higher than 1.5. This means that it is able to meet its interest payments comfortably with its earnings (EBIT).

- Return on Equity(ROE) for the last financial year was 36.2%, more than 20% in the last financial year, indicating an efficient use of shareholder's capital to generate profit.

- Price to Earning Ratio is 60.58, higher than its sector PE ratio of 32.99.

- Promoter Share Holding stayed the same in the most recent quarter at 43.92%.

- Promoter Pledges are zero.

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 centres, 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.