Buy Tata Elxsi: target of Rs 2850: Sharekhan
Sharekhan is bullish on Tata Elxsi has recommended buy rating on the stock with a target price of Rs 2850 in its research report dated January 13, 2021.
January 14, 2021 / 08:17 PM IST
Sharekhan's research report on Tata Elxsi
Beat on all fronts; Constant currency revenue grew by 10% q-o-q, led by strong growth in its key business segments; EBITDA margin improved by 266bps q-o-q despite wage revision, led by higher utilisation and increasing offshore mix. The company’s continued investments in sales and marketing, delivery and building new-age capabilities would help it to win large long-term deals going ahead. Focus on cross selling of design-related services likely to drive growth. We expect margin to sustain in the medium term, given 1) continued reduced travel and administration expenses, 2) WFH efficiencies, 3) higher offshoring, and 4) better cost control. The company’s offshore revenue contribution may not come back to pre-COVID level.
We retain our Buy rating on Tata Elxsi Limited (TEL) with a revised PT of Rs. 2,850, given sustained recovery in the auto segment and rising spends in the digital engineering space.
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