Stock To Buy: Buy This Tata Group Mid Cap IT Stock With High EPS Growth, Hitting New High

Tata group stocks are among investors' favourite. Likewise, here is a stock idea from the Tata group pack that can offer you decent returns. Of late the stock is hitting new highs given the strong growth outlook. Here we are talking about none other than Tata Group's Tata Elxsi scrip.

About Tata Elxsi

Tata Elxsi is a software sector company. Tata Elxsi is amongst the world's leading providers of design and technology services across industries including Automotive, Broadcast, Communications, Healthcare, and Transportation. By and large the company is enabling its clientele repurpose their products and services via design thinking and the application of digital technologies such as IoT (Internet of Things), Cloud, Mobility, Virtual Reality, and Artificial Intelligence.

 

Tata Elxsi shares have gained a whopping over 31% in the last 1-month

Tata Elxsi scrip has emerged as the outlier within the mid-cap IT stock pack. The stock in the last 1-year has given a return to the tune of 142% and is on course to become a multibagger on a YTD basis. Considering the current run-up, the YTD return on the stock is around 81%. In trade on Monday (August 16, 2022), the stock has again hit a new fresh high of Rs. 10719.4 apiece on the NSE, gaining 4.7% over the previous session.

The sharp run up in the stock price of Tata Elxsi to the tune of over 31% in the last 1-month is primarily given the strong growth outlook. The company in its Fy22 annual report said its auto engineering business is well placed to cater to the opportunities emerging as a result of the ecosystem transformation within the space. This thus allows the company to actively collaborate with its clientele for driving projects on Autonomous Driving (AD), ADAS (Advanced Driver Assistance Systems), electrification projects and digitalisation.

Tata Elxsi delivers strong growth in Fy23 with industry leading EBITDA margin at 32.8%

The company's revenue from operations during the June ended quarter of Fy23 logged 6.5% QoQ and 30% YoY growth at Rs. 725.9 crore. EBITDA grew 7.6% QoQ and 58.8% YoY to 238.2 Cr, with EBITA-margin at its best in the industry at 32.8%. Profit after tax also logged around 63% YoY gain to Rs. 184.7 crore during the quarter. EPS or earning per share has been consistently rising QoQ and grew to Rs. 29.66 during the review period as against Rs. 18.21 in June 2021.

Why 'Buy' the stock of Tata Elxsi

In the view of Sonam Srivastava, Founder, Wright Research, Tata Elxsi is not a conventional tech company. In fact it is a new-age product development entity working with some of the global players in the EV space within the auto-category. The company offering engineering as well as R&D solution is looked upon by global innovation companies for their back-end operations.

Noticeably with other tech companies have struggled during the last quarter, Tata group's mid-cap design-led technology services company delivered 15.45% EPS growth and also logged a lifetime-high revenue of Rs 736.21 crore.

Further, the company's revenue as well as stock price growth is seen to sustain through the next year.