Tata Elxsi Receives 'Sell' Rating from MarketsMOJO, Technical and Valuation Factors Raise Concerns

Tata Elxsi, a leading IT software company, has recently received a 'Sell' rating from MarketsMOJO on September 3rd, 2024. This downgrade is based on several factors, including flat results in the June 2024 quarter, with the lowest ROCE (HY) at 39.17%, PBT LESS OI (Q) at Rs 220.32 crore, and EPS (Q) at Rs 29.56.
Technically, the stock is in a Mildly Bearish range and the trend has deteriorated from Mildly Bullish on September 2nd, 2024. The key technical factor, RSI, has also been Bearish since September 2nd, 2024.

In terms of valuation, Tata Elxsi has a high ROE of 31.4 and a Price to Book Value of 19.6, making it a very expensive stock. However, it is currently trading at a discount compared to its average historical valuations.

Despite generating a return of 8.06% in the past year, the company's profits have only risen by 3.7%, resulting in a high PEG ratio of 16.7.

Moreover, institutional investors have decreased their stake in the company by -0.7% over the previous quarter, holding only 19.92% collectively. This indicates that these investors, who have better resources and capabilities to analyze company fundamentals, have lost confidence in Tata Elxsi.

In comparison to the market (BSE 500) returns of 38.66%, Tata Elxsi has underperformed with a return of only 8.06% in the last year.

On a positive note, the company has a low Debt to Equity ratio (avg) of 0 times. However, considering all the other factors, it is advisable to approach this stock with caution.