⚠ Disclaimer: This report is generated using AI tools and is for informational purposes only. It does not constitute investment advice. Please consult a registered financial advisor before making any investment decisions.
TATAELXSI - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.1
| Stock Code | TATAELXSI | Market Cap | 26,237 Cr. | Current Price | 4,210 ₹ | High / Low | 6,735 ₹ |
| Stock P/E | 41.6 | Book Value | 434 ₹ | Dividend Yield | 1.78 % | ROCE | 36.3 % |
| ROE | 29.3 % | Face Value | 10.0 ₹ | DMA 50 | 4,810 ₹ | DMA 200 | 5,399 ₹ |
| Chg in FII Hold | -3.97 % | Chg in DII Hold | 1.91 % | PAT Qtr | 159 Cr. | PAT Prev Qtr | 155 Cr. |
| RSI | 30.6 | MACD | -232 | Volume | 6,31,273 | Avg Vol 1Wk | 4,01,451 |
| Low price | 4,051 ₹ | High price | 6,735 ₹ | PEG Ratio | 3.28 | Debt to equity | 0.06 |
| 52w Index | 5.93 % | Qtr Profit Var | -20.0 % | EPS | 93.2 ₹ | Industry PE | 20.9 |
📊 Financial Overview
- Revenue & Profit Growth: Quarterly PAT rose slightly from ₹155 Cr. to ₹159 Cr., but YoY profit variation (-20%) shows earnings pressure.
- Margins: ROE at 29.3% and ROCE at 36.3% reflect strong profitability and capital efficiency.
- Debt: Debt-to-equity ratio of 0.06 indicates negligible leverage, ensuring financial stability.
- Cash Flow: Supported by design and technology services, though growth momentum has slowed.
💹 Valuation Indicators
- P/E Ratio: 41.6 vs Industry PE of 20.9 → significantly overvalued compared to peers.
- P/B Ratio: Current Price ₹4,210 vs Book Value ₹434 → ~9.7x, reflecting premium valuation.
- PEG Ratio: 3.28 → signals overvaluation relative to growth prospects.
- Intrinsic Value: Estimated fair value near ₹3,800–4,000, suggesting current price is slightly overvalued.
🎨 Business Model & Competitive Advantage
- Operates in design, technology, and engineering services with focus on automotive, media, and healthcare sectors.
- Competitive advantage lies in niche expertise, innovation, and Tata Group backing.
- Strong global client base and specialized offerings support resilience.
📈 Entry Zone & Long-Term Guidance
- Entry Zone: Attractive between ₹3,800–4,000, closer to intrinsic value.
- Long-Term Holding: Suitable for 5+ year horizon; strong fundamentals and niche positioning make it a solid long-term bet, though valuations are stretched.
✅ Positive
- Strong ROE (29.3%) and ROCE (36.3%) highlight efficiency and profitability.
- Low debt-to-equity ratio (0.06) ensures financial stability.
- DII holdings increased (+1.91%), reflecting domestic institutional confidence.
⚠️ Limitation
- P/E ratio (41.6) is significantly higher than industry average.
- P/B ratio (~9.7x) reflects heavy premium valuation.
- PEG ratio (3.28) signals overvaluation relative to growth.
📉 Company Negative News
- FII holdings decreased (-3.97%), showing reduced foreign investor confidence.
- Profit variation (-20%) highlights earnings pressure.
📈 Company Positive News
- DII holdings increased, reflecting domestic confidence.
- Strong niche positioning in design and technology services.
- Low debt levels provide resilience against market volatility.
🏭 Industry
- Technology and design services industry is growing, driven by innovation and digital transformation.
- Industry PE at 20.9 shows sector is moderately valued compared to Tata Elxsi’s premium.
- Global demand for specialized design and engineering solutions supports long-term growth.
🔎 Conclusion
Tata Elxsi demonstrates strong fundamentals with excellent ROE, ROCE, and low debt, but valuations are stretched with high P/E, P/B, and PEG ratios. Entry around ₹3,800–4,000 offers better risk-reward. Long-term investors can hold for 5+ years, benefiting from niche expertise, Tata Group backing, and global demand, though caution is advised due to premium valuation and earnings volatility.