Tata Elxsi gains 5%, hits record high in a weak market

In the past three months, the stock has outperformed the market by surging 45 per cent as the company delivered strong and consistent growth in December quarter.

Shares of Tata Elxsi moved higher by 5 per cent to a record high level of Rs 7,971.90 on the BSE in Friday’s intra-day trade in an otherwise weak market. The stock of Tata Group Company surpassed its previous high of Rs 7,949 touched on February 1, 2022.

Tata Elxsi is amongst the world’s leading providers of design and technology services across industries, including automotive, media, communications, healthcare, and transportation.

In the past three months, the stock has outperformed the market by surging 45 per cent after the company delivered strong and consistent growth, with 33.2 per cent year-on-year revenue growth and profit after tax (PAT) growth of 43.5 per cent in December quarter (Q3FY22). In comparison, the S&P BSE Sensex was up marginally by 0.26 per cent during the same period.

While, announcing Q3 results on January 18, 2022, Tata Elxsi’s management said the company is seeing significant growth in the automotive market, with large and strategic deals with both OEMs and suppliers across electric, autonomous, connected and digital, underscoring company’s technology and engineering leadership.

The company has won strategic multi-year large deals this quarter against the best global competitors in all three industries. “We are entering the fourth quarter with the confidence of a strong order book and a healthy deal pipeline across key markets and industries,” it said.

Meanwhile, in February, Tata Investment Corporation Limited, the promoter group company of Tata Elxsi sold 150,000 shares worth of Rs 109 crore of the company. Tata Investment Corporation had sold these shares in open market between February 10, 2022 and February 16, 2022, the exchange data shows. The names of the buyers not ascertained immediately.

Analyst at HDFC Securities remain positive on the company’s growth prospects and growth leadership in ER&D (+27/31 per cent revenue/EPS CAGR over FY21-24E), although the risk-reward is unfavourable with growth premium vs. ER&D peers reducing. “The near-term prospects remain strong with FY22E revenue growth expected at 33.6 per cent, which would subsequently normalise to around 26/21 per cent in FY23/24E,” the brokerage firm said in result date.