Multi Baggers
Tata Elxsi
BSE ID : 500408 NSE ID : TATAELXSI
RECOMMENDED PRICE 252.85
PEAK FROM RECO 10760.40 4,155.65%
CURRENT PRICE 7485.00 Resource id #12
Tata Elxsi is a design company that blends technology, creativity and engineering to help customers transform ideas into world-class products and solutions. We recommend 'BUY' on the stock with a target price of Rs 315 in the medium to long term investment horizon.
Tata Elxsi
Tata Elxsi - a leading product design company in India has posted strong set of numbers in Q2FY14 as bottomline of company surged by whopping 90 percent (after excluding exceptional loss of Rs 8.51 cr in Q2FY13) while topline of company has witnessed growth of 22 percent. The margins of company has also seen sharp rise both on operating & net profit margin front. The operating profit margin of company has seen surge of more than 50 percent from 11.24 percent in Q2FY13 to 17.08 percent in Q2FY14. Similarly net profit margin of company has registered growth of more than 50 percent in Q2FY14 as compare to Q2FY13.
Company has recently entered into partnership with Algotochip, a USA based company which is industry's first company to provide complete SoC GDSII from algorithms written in C-code. This partnership allows customers to incorporate advanced technology into their SoCs and to get market faster by reducing development time & risks.
According to industry lobby Nasscom, by 2020, global spending on E&D services is expected to touch USD 1.6 trillion by 2020, up from USD 1.3 trillion in 2011. Out of this, offshore spending is expected to be USD 116 billion. This is likely to create a USD 37- to USD 45-billion market for India's E&D export, thus benefitting company in capturing major share.
Tata Elxsi is a design company that blends technology, creativity and engineering to help customers transform ideas into world-class products and solutions. A part of the USD 100 billion Tata group, company addresses the communications, consumer products, defence, healthcare, media & entertainment, semiconductor and transportation sectors. The Company has over 4000 employees and a network of design studios, development centers and offices worldwide. Key services include embedded product design, industrial design, animation & visual effects and systems integration. Headquartered in Bangalore, India, co's global network of offices includes Dubai, France, Germany, Japan, Malaysia, Singapore, South Africa, UAE, UK, and USA.
Valuation
Tata Elxsi, which is a part of USD 100 billion Tata group, addresses the communications, consumer electronics, healthcare, media & entertainment, semiconductor & transportation sector. With strong results and rapid industry growth, company is looking an attractive destination to deploy the funds. At a CMP of Rs 252.85, company trades at 16.10x of FY14E EPS of Rs 15.70 & 14.14x of FY15E EPS of Rs 17.88. We recommend 'BUY' on the stock with a target price of Rs 315 (appreciation of about 25 percent) in the medium to long term investment horizon.
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Disclaimer & Disclosure: This document is prepared for our clients only, on the basis of publicly available information and other sources believed to be reliable. Whilst we are not soliciting any action based on this information, all care has been taken to ensure that the facts are accurate, fair and reasonable. This information is not intended as an offer or solicitation for the purchase or sell of any financial instrument and at any point should not be considered as an investment advice. Reader is requested to rely on his own decision and may take independent professional advice before investing. Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited, Directors and any of its employees shall not be responsible for the content. The person accessing this information specifically agrees to exempt Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and further agrees to hold Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The companies and its affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities there of, company (ies) mentioned herein and the same have acted upon or used the information prior to, or immediately following the publication. Analyst Certification The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
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