Tata Elxsi shares slip 5% after Q1 FY24 results; should you buy, sell or hold?

Shares of Tata Elxsi Ltd fell 4.65 per cent in Tuesday's trade to hit a day low of Rs 7,352.55. The stock tumbled today after the design and technology services firm posted its smallest rise in profit in at least 15 quarters. The stock was last seen trading 2.23 per cent lower at Rs 7,538.85. At today's low price, the counter has gained 28.81 per cent from its 52-week low of Rs 5,708.10, a level seen on December 26, 2022. Yet, it has fallen 31.67 per cent from its one-year high price of Rs 10,760.40, hit on August 17 last year. Tata Elxsi is a subsidiary of Tata Sons, holding company of the Tata Group.

The company's profit rose marginally by 2.20 per cent year-on-year (YoY) to Rs 189 crore in the quarter ended on June 30, while revenue from operations climbed 17.10 per cent to Rs 850 crore. Tata Elxsi said some of its deal closures were delayed in Q1 FY24. The company also mentioned that it witnessed muted growth in its media and communications business as the media, telecom and technology sector is "still soft" globally. We remain cautious on short-term growth in this sector, it added.

On technical setup, support on the counter could be seen at Rs 7,320, followed by Rs 7,310 and Rs 7,300 levels.

Osho Krishan, Senior Analyst, Technical & Derivative Research at Angel One, said, "Tata Elxsi has rallied close to 35 per cent in the current financial year, post which it underwent some consolidation in the last month. The stock has strong support around the Rs 7,300 zone, breaching which it might test the breakout zone of Rs 7,100-odd level. On the flip side, the stock is likely to face a strong hurdle around Rs 7,650-7,690, followed by the swing high of Rs 7,850-7,870 in the comparable period."

Vaishali Parekh, Vice-President - Technical Research at Prabhudas Lilladher, said, "After a gradual slide, the stock has taken support near Rs 7,320 zone. The near-term support is maintained near Rs 7,320 and a decisive breach below the said level would further weaken the trend. For upside, a decisive breach above Rs 7,950 is necessary to trigger a breakout."

AR Ramachandran from Tips2trades said, "Tata Elxsi is bullish on the daily charts with strong support at Rs 7,310. A daily close above resistance of Rs 7846 could lead to target of Rs 8,150 in the near term."

The counter's 14-day relative strength index (RSI) came at 49.56. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-earnings (P/E) ratio of 63.24 against a price-to-book (P/B) value of 23.02. The scrip has a one-year beta of 0.92, indicating low volatility.

Meanwhile, Indian equity benchmarks touched their fresh lifetime highs today. The 30-share BSE Sensex pack breached 67,000 level for the first time, while the broader NSE Nifty index topped the 19,800 mark.

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