Tata Elxsi (TATAELXSI)
CyclicalFairStock Score: 56/100 — STEADY
Score breakdown: P/E: 0/3 · ROCE: 2/2 · Growth: 0/2 · Dividend: 0/1
Key Financials
| Current Price | ₹3,772.7 |
| Market Cap | ₹23,503.75 Cr |
| P/E Ratio | 35.84 |
| ROCE | 36.26% |
| ROE | 20.3% |
| Dividend Yield | 1.99% |
| Profit Growth | 18.1% |
| Debt/Equity | 0.05 |
| Sales Growth | 14.5% |
| Free Cash Flow | ₹114 Cr |
| Promoter Holding | 43.9% |
| 52-Week Range | ₹3,359.4 — ₹5,950 |
| Sector | IT - Software |
| Book Value | ₹488.2 |
Strengths
- Zero debt (Debt/Equity 0.00) and strong financial health, reflected in Altman Z-Score of 7.26.
- High capital efficiency with ROE of 20.30% and ROCE of 36.26%.
- Historical growth record: 5-year revenue CAGR of 15.34%.
- Promoter holding of 43.90% aligns management with minority shareholders.
- Positive FCF of ₹114 Cr and Piotroski F-Score of 7/9 indicate operational soundness.
Concerns
- Recent deterioration: sales growth -1.47% and profit growth -28.28%.
- Valuation very rich: P/E 44.57, P/B 9.22, far above Graham Number of ₹981.08 and DCF value of ₹225.87—no margin of safety.
- FCF of ₹114 Cr is negligible relative to a ₹28,114 Cr market cap.
- Negative EV/EBITDA of -124.72 suggests distorted or stressed valuation metrics.
AI Analysis
At ₹4,233.50, Tata Elxsi tests my discipline. On one hand, this is no ordinary enterprise: zero debt, ROE of 20.30%, ROCE of 36.26%, and a 5-year revenue CAGR of 15.34%. Promoters own 43.90%, so interests are aligned. The latest quarter still generated ₹953 Cr in sales and ₹109 Cr in profit, with positive free cash flow of ₹114 Cr and a Piotroski F-Score of 7/9. These are qualities Graham would admire. But a good business is not necessarily a good investment. The price asks me to pay 44.57 times earnings and 9.22 times book value for a company whose sales fell 1.47% and profits fell 28.28%. That is a dangerous combination. My Graham Number, computed from book value and earnings power, stands at ₹981.08—the stock trades at a massive premium to that conservative estimate. The DCF value of ₹225.87 is nowhere near the market price. EV/EBITDA is negative, a signal that the current metrics are distorted and demand caution. Even with strong returns on capital, I need a margin of safety; here there is none. This looks like a quality cyclical business at the wrong point in the cycle. Maybe the engineering R&D tailwind returns and growth reaccelerates, but I cannot underwrite a ₹28,114 Cr market cap with profit falling by 28%. If the stock were near my value zone, I would gladly study it further. At ₹4,233.50, I would rather wait. Price is what you pay; value is what you get. Today, value is not enough.
Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer