Sharekhan has given Buy recommendation for Tata Elxsi with a target price of Rs. 8160 in its research report issued on Jan 19, 2022
Sharekhan’s research report on Tata Elxsi
Excellent all-round growth; EBITDA margin significantly beat our estimates; Q3 witnessed strong deal inflows across its verticals, improving utilisation, higher offshoring, healthy fresher intake, and good deal pipeline. TEL is well poised to benefit from market opportunities, given excellent digital engineering capability, a quality client base, solid execution, and rising spends across its focused verticals. However, we expect limited room for margin expansion in subsequent quarters. We expect USD revenue/earnings to report a 22%/20% CAGR over FY2022-FY2024E. We continue to prefer TEL, given its long-standing client relationships, increased focus on long-term deal contracts, and huge addressable market.
We retain Buy on Tata Elxsi Limited (TEL) with a revised PT of Rs. 8,160, given its presence in fast-growing verticals, superior margin profile, strong digital engineering capabilities, and robust demand.