Shares of Tata Elxsi, a leading design and technology services provider, rose more than four times in the past year compared with an over 50 percent rally in the Nifty 50 and a 60 percent gain in the S&P BSE 500 index.
On a year-to-date basis, too, Tata Elxsi outperformed the indices, advancing by over 130 percent compared with a 13 percent gain in the Nifty and an 18 percent increase in the BSE 500 index.
With a market capitalisation of over Rs 26,300 crore, Tata Elxsi hit a 52-week high of Rs 4,320 on June 30 and experts said there is still room for an upside in the stock. The near-term target for the stock is placed at Rs 4,500-4,740 in the next six to nine months, experts suggested.
Long-term investors can hold the stock for up to another nine months as the recent breakout can take it higher if there is no meaningful selling pressure.
Tata Elxsi provides design and technology services to companies across the automotive, broadcast, communications, healthcare and transportation sectors. The company helps customers reimagine their products and services through design thinking and the application of digital technologies such as Internet of Things, cloud, mobility, virtual reality and artificial intelligence, according to its website.
Tata Elxsi is an engineering research & development company under the Tata Group. The global ER&D market is worth $1.4 trillion and is expected to expand by a compounded annual growth rate of 11 percent to $1.9 trillion by 2023, according to Zinnov, a global management consulting and strategy advisory firm.
“Manufacturing verticals such as aerospace, automotive and industrial bore the brunt of the pandemic and witnessed a change in ER&D priorities,” said Ashish Chaturmohta, director of research at Sanctum Wealth Management. “But going forward, 5G, digital thread and sustainable engineering are the key pillars that will drive digital engineering spend.”
Technically, the stock is on a major uptrend, forming higher highs and higher bottoms over the past 15 months. After trading sideways and consolidating its gains, the stock hit a fresh high on June 30.
“Price has taken support at major long-term rising support trend line connecting the December 2020 low of Rs 1,468 and the March 2021 low of Rs 2,581 and has now resumed its uptrend. Also, the stock has been taking support at 21-day exponential moving average (green line) and trending higher,” said Chaturmohta. “The stock can be bought at current levels and on dips towards Rs 3,830, with a stop-loss of Rs 3,650 for the target of Rs 4,500-4,740 levels. The time frame is between six and nine months.”
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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