Buy Tata Elxsi: target of Rs 5000: Sharekhan

Sharekhan is bullish on Tata Elxsi has recommended buy rating on the stock with a target price of Rs 5000 in its research report dated July 16, 2021.

An Edelweiss research report for Q4FY21 says road tonnage continued to improve, evident in e-way bill generation (up 6% QoQ) and improved core trucking rentals. “We estimate tonnage would increase by three–five percent for truckers. Asset-light plays Mahindra Logistics and TCI Express remain our preferred picks due to their ability to scale up/down as the environment demands,” the report said. Edelweiss is bullish on Blue Dart Express due to the pandemic-induced boom in e-commerce and its leaner cost structure. It has retained a ‘buy’ call on Mahindra Logistics, TCI Express and Blue Dart Express.

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Sharekhan’s research report on Tata Elxsi

CC revenues grew by 37.4% y-o-y continuing strong outperformance seen in past four quarters, but EBITDA margin lagged estimates owing to a one-time bonus; net staff additions stayed strong. Growth momentum likely to continue given a strong order book, robust deal pipeline, improving deal size, presence in high-growth verticals and hyper-digitisation and technology adoption across industries. EBITDA margin to remain in a narrow band in FY22 despite headwinds, given strong revenue growth, higher offshoring, and better realisations in complex projects. We expect USD revenue/earnings to clock a 24%/26% CAGR over FY2021-FY2024E.

Outlook

We retain a Buy on Tata Elxsi with a revised PT of Rs. 5,000, as revenue is set to grow at twice the industry average, margin profile is superior and company has differentiated technological capabilities.

For all recommendations report, click here

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