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10 Solid reasons why Tata Elxsi can become future Multibagger.

Updated: Nov 17, 2019



what makes a stock ‘Multibagger’?

  • Strong Fundamentals.

  • Consistent Growth.

  • Sustainable increase in scale and margins.

Let’s see the data for the last 1 year:

The list of stocks which delivered multibagger returns. (Mostly Mid and SmallCaps)

I think Tata Elxsi has the potential to deliver multibagger returns:

A Brief about the company:

Tata Elxsi Limited is engaged in the design and development of computer hardware and software. The Company operates in two segments: System integration & support, and Software Development & Services. Its software development & services segment comprises three business divisions: Embedded Product Design, which provides technology consulting, new product design, development, and testing services for the broadcast, consumer electronics, healthcare, telecom and transportation industries; Industrial Design (ID), which services a range of industries, including automotive, consumer electronics, retail and consumer goods and healthcare, and Visual Computing Labs (VCL), which provides three dimensional (3D) animation services, addressing content development for feature films, television and advertising commercials

Reasons:

  1. Compounded Sales Growth of last 5 Years: 18.05%

2. Compounded Profit Growth of last 5 Years: 50.63%

3. The company has zero debt.

Net profit margin trend:

4. Pledged percentage: 0.00 %

5. Free cash flow 5years: 599.68 Cr.

6. Well diversified business.

  • Technology Services & Product Engineering

  • Design

  • Systems Integration Services

7. The company has been maintaining a healthy dividend payout of 28.40%.

8. Ratio Analysis and other Important Fundamentals:

Dividend Yield: 1.26 % | ROCE: 56.53 % | ROE: 37.20 % | EVEBITDA: 11.01 | Current ratio: 5.39 | Quick ratio: 5.39 | Promoter holding: 44.53 % | Price to Sales: 3.41 | PEG Ratio: 0.37 | Return on assets: 35.96 % | Return on invested capital: 48.67 %

9. Tata Elxsi has announced that it will manufacture and provide its Autosar Adaptive platform to China-based Great Wall Motors. The Autosar Adaptive platform will help accelerate the development of connected, autonomous, and driverless vehicles for the Chinese carmaker.

Inside Tata Elxsi’s quest to bring self-driving cars to India

10. Technical Analysis: Bullish om Charts.

13 out of 28 major indicators show that this stock is bullish on charts.

Tata Elxsi is an Indian design company and a part of the Tata Group. This stock can also be bought for mid-term with a target price of 1,000 Rs in 6 months.

Akshay Seth

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