Tata Elxsi jumps 7% as FPIs hike stake in Q3; stock surges 177% in 6 months

In the past two quarters, FPIs have increased their stake in the company by 2.08 percentage points

Shares of Tata Elxsi rallied 7 per cent to Rs 2,534 on the BSE on Monday, in an otherwise weak market, after foreign portfolio investors (FPIs) increased their stake in the company by nearly one percentage points during the October-December quarter (Q3FY21). 

In the past two quarters, FPIs have increased their stake in Tata group information technology (IT) software products company by 2.08 percentage points. In comparison, the S&P BSE Sensex was down 0.51 per cent at 48,783 points at 10:02 am.

The stock hit a record high of Rs 2,576 on January 14, 2020. In the past one month, the stock has rallied 55 per cent as against a 4 per cent rise in the S&P BSE Sensex. In the past six months, it has zoomed 177 per cent as compared to a 32 per cent surge in the benchmark index.

According to the Q3FY21 shareholding pattern filed by Tata Elxsi, FPIs have increased their holding in the company by 0.87 per cent to 12.62 per cent from 11.75 per cent at the end of September 2020 quarter (Q2FY21). FPIs held 10.54 per cent stake in Tata Elxsi as on June 30, 2020 (Q1FY20), shareholding pattern data shows. They bought an additional 1.30 million equity shares of the company between July and December 2020.

Meanwhile, Tata Elxsi last week reported strong Q3FY21 results with double-digit quarter on quarter (QoQ) revenue growth and industry-leading operating margins. The company’s revenues increased by 10.9 per cent QoQ to Rs 477 crore. In constant currency terms, revenues grew 10 per cent QoQ mainly led by growth in transportation, broadcast & communication and healthcare segment. Ebit (earnings before interest and tax) margins increased around 300 basis points (bps) to 27.8 per cent. Meanwhile, profit after tax (PAT) increased by 33.3 per cent QoQ to Rs 105 crore.

Going forward, the company is expected to report robust numbers based on multiyear large deals won by the company and ramp-up of previous deals. In addition, the company's strategy to diversify into healthcare and broadband is bearing fruit.