Why Tata Elxsi share price is skyrocketing — explained

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Tata Elxsi share price has scaled to its life-time high on two successive sessions. The multibagger IT stock that has given 235 per cent return to its shareholders in last one year, ascended to a new peak on Friday and the rally continued on Monday leading to a new high of 9,160 apiece levels on NSE. In last two trade sessions, this multibagger stock has surged to the tune of 18 per cent (from 7610 to 9010 apiece levels on NSE).

According to stock market experts, the Tata group company has a diversified portfolio where it has an ambitious driver-less car project in auto segment. Apart from this, it is providing AI and digital learning services to globally renowned companies like Amazon, Google, Siemens, Audi, etc. It is working on high growth industries like entertainment, which is expected to register strong business volume on unlock theme. They said that market is bullish on Tata Elxsi share price due to these factors that has led to sudden spike in this multibagger stock.

Speaking on the reasons for rise in Tata Elxsi share price rally; Avinash Gorakshkar, Head of Research at Profitmart Securities said, “Tata Elxsi is handing an ambitious driver-less car project and it is providing its services and expertise in EV segment as well. This is the immediate reason for multibagger stock’s sudden appreciation in recent sessions. Apart from this, the company has reported improvement in margins, strong order book in Q3, which is expected to improve further on unlock theme. Tata Elxsi has strong business in entertainment industry, which is expected to register strong jump in business after subsiding Covid-19 cases. Company is giving its services and expertise to various sector companies like Amazon, Google, Netflix, Audi, Siemens, etc., that also signals about the strong business model it has developed over the time.”

As per Edelweiss alternative and quantitative research report, “India’s weighting in the widely tracked MSCI Emerging Markets (EM) index shot up to approximately 12.3 per cent now from approximately 8.1 per cent in end of Oct-2020. The two factors that have driven fresh inclusions and an uptick in the weightings of existing Indian constituents are: i) the new regime on foreign ownership limit (FOL) taking effect in the Nov-20 review; and ii) domestic stocks’ strong out-performance to other EM counterparts.” The Edelweiss research went on to add that market cap cut-off date could be between April 18 to 29, 2022 and the announcement could be made on May 13 while re-balancing could be effective from May 31.

Tata Elxsi share price history

In last one month, this multibagger stock has surged from around 6430 to 9010 apiece levels, logging around 40 per cent upside whereas in last 6 months this Tata group stock has risen near 60 per cent. Similarly, in year-to-date time, this multibagger Tata group stock has delivered more than 50 per cent return to its shareholders whereas in last one year, it has surged around 235 per cent in post-Covid rally.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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