KR Choksey has given Accumulate recommendation for ICICI Bank with a target price of Rs. 8884 in its research report issued on Apr 21, 2022
KR Choksey’s research report on Tata Elxsi
TATA Elxsi Ltd (TELX) Q4FY22 performance was slightly lower than our estimate. Rupee revenue grew by 7.3% QoQ to INR 6,817Mn (with a CC revenue growth of 7.4% in Q4FY22), powered by Embedded Product Design (EPD) growing at 7.5% QoQ, while Industrial Design and Visualization (IDV) grew smartly at 8.0% QoQ. Operating margin for the quarter stood at 32.1%. The overall growth was fueled by digital and platform-led deals. Significant growth in the automotive market helped TELX to win large and strategic deals with both OEM and suppliers in EV and autonomous technologies. Reported Net profit grew by 6% QoQ to INR 1,600Mn with margin of 23.5%. In-spite of the ongoing talent crunch, margins to remain stable in the near term, led by higher offshoring/utilization, deeper customer mining, large sustainable deals, rebalancing vertical/geographical mix and operating leverage. The deal pipeline remains robust with a good mix of large deals and has seen traction in Rail, commercial vehicle & healthcare segment. Our target price of INR 8,884 is based on 64x Mar-24E EPS with EPS CAGR of 25.4% over FY22-24E.
TELX is currently trading at a valuation with a P/E multiple of 70.2x/56.9x on FY23E/FY24E earnings. We expect strong deal momentum across verticals, addition of new clients from newer geographies, higher focus on IDV especially in design-led digital projects, and multi-year tailwind in EPD and hence we are assigning a P/E multiple of 64x to the FY24 estimated EPS of INR 138.8 to arrive at a target price of INR 8,884 per share (Earlier INR 7,504), an upside of 12.4% over the CMP. Accordingly, we maintain our rating to an “ACCUMULATE” to the stock.