TATAELXSI - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 4.0

🎯 Tata Elxsi Ltd (TATAELXSI) showcases strong profitability, low debt, and a niche tech-driven business model, though elevated valuation and recent profit contraction suggest a cautious accumulation strategy.

📈 Positive

• 📊 Capital Efficiency: ROCE of 36.3% and ROE of 29.3% reflect excellent operational performance.
• 📉 Low Leverage: Debt-to-equity ratio of 0.06 ensures financial resilience and conservative capital structure.
• 💸 Dividend Yield: 1.38% offers moderate passive income for long-term investors.
• 📈 EPS Strength: ₹108 supports valuation and long-term earnings visibility.
• 📈 DII Confidence: DII holdings increased by 0.58%, indicating domestic institutional support.

⚠️ Limitation

• 💰 Elevated Valuation: P/E of 50.7 is significantly above the industry average of 29.4.
• 📉 High PEG Ratio: 4.00 suggests valuation may not be fully supported by growth.
• 📉 Profit Decline: Qtr Profit Var of -32.5% indicates margin pressure or demand softness.
• 📉 FII Outflows: FII holdings declined by 0.21%, reflecting foreign investor caution.
• 📉 Volume Dip: Current volume below weekly average, suggesting reduced market activity.

📉 Company Negative News

• Stock down nearly 27% from 52-week high, reflecting valuation compression.
• Sequential profit decline and weak volume signal short-term headwinds.

📈 Company Positive News

• Strong quarterly PAT of ₹155 Cr. and consistent EPS performance.
• Leadership in embedded systems, automotive software, and design-led digital transformation.
• Positive MACD and RSI suggest technical stability and potential upside.

🏭 Industry

• Engineering R&D and design services sector benefits from digital transformation, autonomous systems, and AI adoption.
• Industry P/E of 29.4 reflects moderate valuation norms and innovation-driven growth.
• Peers include L&T Technology Services, KPIT Technologies, and Tata Technologies.

🧾 Conclusion

• 📉 Entry Zone: ₹5,300–₹5,450 could be a favorable accumulation range based on DMA and RSI levels.
• 📈 Long-Term View: Hold for 3–5 years; strong fundamentals and niche positioning support sustained growth.
• 🔍 Valuation Watch: Consider phased entry or wait for earnings rebound to justify premium pricing.