This Tata Group Stock Grew 49% YoY In FY22, Buy With Rs. 9,200 Target Price: Sharekhan

Brokerage firm Sharekhan suggests buying the stocks of Tata Elxsi Ltd for good returns. The company's revenue in FY22 has recorded at Rs. 2,470.8 crore, which is expected to be at Rs. 3,066.8 crore in FY23. TEL's YoY growth in FY22 was at 49.3%, which is expected to be at 27% in FY23.

Stock To Buy: Target Price, Current Market Price

The Current Market Price (CMP) of Tata Elxsi Ltd. is Rs. 8,056. Sharekhan has estimated a Target Price for the stock at Rs. 9,200. This stock has the potential to give an 11.72% return, in the upcoming 1 year. This is a large-cap stock with a market capitalization of around Rs. 50,422 crore.

Stock Outlook
Current Market Price (CMP)	Rs. 8,056
Target Price	Rs. 9,200
Potential 1 year return	11.72%
52 week high share price	Rs. 9,420
52 week low share price	Rs. 4,107.05

TEL registered constant currency (CC) revenue growth of 6.5% q-o-q and 30.9% y-o-y during the quarter, led by strong volume. EBITDA margin improved by 36bps q-o-q to 32.8%, aided by strong growth, improved utilization, better pricing, and SG&A optimization. Net profit of Rs. 184.7 crore was 12%, aided by a beat in margin and lower tax provision.

Stock advantages and risks: Sharekhan

Tata Elxsi Limited's (TEL) strong revenue growth momentum continued during Q1FY2023, with margin expansion despite partial wage revision (covered 30-40% of its senior-level employees).

Commenting on the stock, Sharekhan stated, "TEL's management indicated that it does not see any deferment of projects or reduction of budget owing to the recent macro-economic situation, though it remains watchful. TEL is well poised to capture market opportunities across the selected verticals and its adjacencies given its unique capabilities in design-led engineering. We believe TEL is well placed to deliver another year of strong growth in FY2023E, given strong order intake, robust digital engineering capabilities, and large addressable markets. TEL may be the only Indian IT company whose stock performance (up 37%) has significantly outperformed CNX IT (down 32%) on a YTD basis, given strong revenue growth visibility, consistent deal wins, and long-standing relationships with marquee clients, and market share gains."

"Rupee appreciation and/or adverse cross-currency movements would adversely impact its earnings. Further, the reversal of offshore effort mix could impact its margins," the brokerage firm mentions as a key risk.

Company profile: Tata Elxsi Ltd.

Incorporated in 1989, Bengaluru-based TEL is a global design and technology services company. The company provides digital design and engineering services and systems integration and support services in India, the US, Europe, and RoW. The company provides solutions and services for emerging technologies such as the internet of things (IoT), big data analytics, cloud, mobility, virtual reality, and artificial intelligence and brings together domain experience across infotainment, autonomous driving, telematics, powertrain, and body electronics. TEL also works with leading OEMs and suppliers in the automotive industries for R&D, design, and product engineering services from architecture to launch. The company has been investing in platforms to scale and build efficiencies.

Disclaimer

The above stock was picked from the brokerage report of Sharekhan. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.