Investors keep hunting for multibagger stocks. While there are thousands of companies in Indian stock market, not every stock can generate good returns to investors. This Information Technology company is fast growing and generated handsome returns to investors in the short term, medium term and long term. Due to recent market correction and fall in IT stocks, even this company shares have corrected to some extent. In this article, I would provide a Midcap Multibagger Stock that generated over 40% annualised returns in 1 year, 3 years, 5 years and 10 years.
About Tata Elxsi Limited
Bengaluru-based Tata Elxsi Limited has been enabling technology-based innovations over the past 25 years. From self-driving cars to video analytics solutions, it has a wide range of innovations enabled by AI and analytics.
The Artificial Intelligence Centre of Excellence (AI CoE) deals with the growing needs of intelligent systems.
Its cloud-based integrated data analytics frameworks, with patent-pending technologies, enable customers to quickly implement and configure the landscape to obtain actionable insights and better results.
One of the important offerings by the company is the Cognitive Video Services Framework, which is essentially an AI-Based Video Analytics solution that helps with tasks such as personalising content for users, transforming the video into value using AI, suggesting new revenue generation, automating the content analysis, and more.
Below are some of the key Artificial Intelligence (AI) programs by the company.
1) AI for the Media industry for content analysis, recommendation, ad analytics, predictive analytics for fault-tolerant systems and improve NPS score
2) Building smart appliances with a rich blend of AI and UX
3) Autonomous navigation systems software for different types of transport systems
4) AI for edge devices complimenting IoT and Industry 4.0 needs
5) AI for situational awareness and operational environment analysis
6) State-of-the-art conversational interfaces for various applications ranging from medical chatbots, support services in telecom, cars and smart appliances
Financial Performance of Tata Elxsi Limited
Its revenues increased from Rs 1,386 Crores (FY2018) to Rs 2,470 Crores (FY2022) in the last 5 years.
Its profits increased from Rs 240 Crores (FY2018) to Rs 549 Crores (FY2022) in the last 5 years.
Its EPS grew from Rs 38.5 to Rs 88.2 in the last 5 years.
This mid cap market cap is Rs 53,000 Crores.
Positive Factors to invest in this company
Strong revenue growth in the last 5 years
Strong margin growth in the last 5 years
RoCE is above 30% in the last 5 years consistently
RoA and RoCE improving in the last 2 years
Company with zero debt
Company with zero promoters pledge
Its revenues have increased every quarter in the last 4 quarters.
Its margins too increased every quarter in the last 4 quarters.
Book value per share is improving in the last 2 years.
Company is declaring consistent dividends every year. Dividend per share in FY22 is Rs 42.5.
FII / FPI’s have increased their shareholding in recent times in this company.
Brokerage firms / Stock brokers have upgraded the target price in the recent times.
Negative Factors of investing in this company
Mutual Funds have reduced their stake in this company in recent times
This stock is trading at a higher P/E ratio of 86x to its earnings
Share Price Performance / Returns
1 Year – 40% (1 lac turned 1.4 lacs)
3 years annualised – 132% (1 lac turned 12 Lacs)
5 years annualised – 60% (1 lac turned 10 Lacs)
10 years annualised – 54% (1 lac turned 74 lacs)
Disclaimer: This article is for educational purpose only. Investment in stocks is a high risk. I keep analyzing various stocks so that I can invest personally. While I am not investing in this stock now as of the day of writing the article, I would purchase them in coming days when I see further correction. Please consult your financial advisor before investing in such stocks.
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