Tata Elxsi Shares Surge 27% in Two Days Amid Strong Market Interest

Shares of Tata Elxsi have exhibited remarkable performance, continuing their upward trajectory for the second consecutive session on Tuesday. The stock recorded a surge of 17.72 percent, reaching an intraday high of Rs 9,082.90, ultimately closing at Rs 8,970.35, marking an overall gain of 26.58 percent in merely two trading days.

The trading activity surrounding Tata Elxsi has seen heightened volume, with approximately 4.81 lakh shares exchanged today. This volume significantly surpasses the two-week average of merely 10,000 shares, resulting in a turnover of Rs 407.02 crore. The company’s market capitalisation stands at Rs 55,864.15 crore.

Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, attributed the increased interest in Tata Elxsi shares to strong buying activity in holding companies, which have recently become appealing due to their relative valuations.

Tata Elxsi operates as a subsidiary of Tata Sons, the holding company of the prestigious Tata Group. The company specializes in providing design and technology services across diverse sectors, including automotive, broadcast, communications, healthcare, and transportation.

Typically, holding companies do not engage in operations independently; rather, they represent investments in other listed entities, particularly within their own group.

The stock’s technical analysis indicates potential support at the Rs 8,600 level, while a firm closing above Rs 9,100 is necessary to spur further growth.

Osho Krishan, Senior Research Analyst – Technical & Derivatives at Angel One, advised caution following the stock’s recent surge, suggesting that investors should await consolidation above Rs 9,100 to anticipate the next phase of the rally.

According to Jigar S Patel, Senior Manager – Technical Research Analyst at Anand Rathi Shares and Stock Brokers, support levels are expected at Rs 8,600, while resistance is positioned at Rs 9,100. A decisive close above the latter could trigger upward movement towards Rs 9,350, with potential short-term trading ranges between Rs 8,000 and Rs 9,400.

Immediate resistance for the stock has been identified at Rs 9,100, with support at Rs 8,600, as noted by Ravi Singh, Senior Vice-President (Retail Research) at Religare Broking.

Tata Elxsi’s shares currently trade above various simple moving averages, including 5-day, 10-day, 20-day, 30-day, 50-day, 100-day, 150-day, and 200-day averages. The stock’s 14-day relative strength index (RSI) is reported at 89.40, indicating that it has entered the overbought territory.

Furthermore, the company’s stock has a price-to-equity (P/E) ratio of 61.02 and a price-to-book (P/B) ratio of 19.18, with earnings per share (EPS) recorded at 126.45 and a return on equity (RoE) of 31.43. Promoters held a 43.92 percent stake in Tata Elxsi as of June 2024.