Tata Elxsi, a midcap tech player of Tata Group, has corrected significantly in 2024 with a decline of nearly 21% so far. This IT stock is below Rs 6,950 levels, giving an opportunity for buy-on-dips to fetch 14% returns for a target price of Rs 7,899 with a time frame of 12 months. Despite being in red YTD, the stock has created tremendous wealth for investors in the long run. The stock will buzz for its Rs 70 dividend per share record date, and other developments if any.
Tata Elxsi Share Price:
Ahead of election results, Tata Elxsi's share price stood at Rs 6948.15 apiece, marginally down with a market cap of Rs 43,270.60 crore on BSE. The stock was near its 52-week low of Rs 6,905.05 apiece, while its 52-week high stood at Rs 9,191.10 apiece.
YTD, the stock dipped by 20.6%. But Tata Elxsi is still a wealth-creating stock for those investors who have stayed with the company in the longest run.
5-year gains of Tata Elxis is about 712%. But its all-time performance has soared by a breathtaking 65,263.59%. The stock was just at Rs 10.63 on April 5, 1996.
If an investor had infused even a meagre Rs 20,000 in April 1996, then by the end of June 3, 2024, their returns were about Rs 1.305 crore taking their corpus value to Rs 1.3072 crore.
The latest drop gives the opportunity to fetch double-digit returns ahead. Geojit is the latest to recommend on Tata Elxsi. The brokerage suggests 'ACCUMULATE'.
Geojit On Tata Elxsi:
For Tata Elxsi, Geojit expects the outlook to continue to be strong for transportation, with multimillion-dollar wins from leading Japanese automotive suppliers for connected infotainment and digital cockpits. Order from the leading multination medical device leader for leveraging the latest AI technology and algorithms to enhance their efficiency in the global regulatory service and identify potential risks and anomalies.
Further, Geojit said, despite the global headwinds, the company's hiring plan to continue to be optimal with a blend of freshmen and lateral employees will be ready in the next 6 months for newer project developments in transport, medical, and media.
On the valuation, Geojit said, "We believe that the growth in the transportation vertical will persist in the coming years, given the need for transformation in the automobile industry. TELX is well positioned to capture the opportunities due to its deep domain knowledge and work on its clients' long-term strategic projects. We expect strong deal wins and a focus on specialized SDS, and a positive outlook on the division is likely to support the valuation."
"We expect that the industry is likely to witness pick-up by the second half of the year on account of the increase in US IT spending. We maintain our value at 45x FY26E EPS, factoring in strong earnings growth and recommend Accumulate rating," Geojit lastly said. The brokerage sets a Rs 7,899 target on Tata Elxsi.
FY24 revenue of the company was at Rs 3,552.1 crore, registering double-digit 13% YoYg growth, while in constant currency the company recorded 9.3% YoY growth in software development and services and 18.6% YoY growth in the system integration and support segment. PBT was up 11.9% to Rs 1,048 crore, surpassing the Rs 1,000 crore mark for the first time. EBITDA margins stood at 29.5%.
Tata Elxsi Dividend:
This midcap is set to pay its highest ever dividend 700% worth Rs 70 per share. The record date is yet to be announced. Before the upcoming Rs 70 per share dividend, Tata Elxsi's highest payout was Rs 60.60 per share in 2023.
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.
Moreover, 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.
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.
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