Investors can buy the stock of Tata Elxsi, given its robust business prospects and reasonable valuations. At Rs 208, the stock trades at 12.5 times its FY08 earnings and 10 times its likely current year earnings.
Strong presence in the product design and engineering segment, emerging opportunities in developing full-length animation films, which Tata Elxsi appears well placed to tap, and an expanding presence in lucrative markets may drive growth for the company.
Tata Elxsi broadly operates under two divisions — software development services (85 per cent of revenues) and a systems integration. The software development division comprises two high growth areas. Product design services catering to clients in consumer electronics, multimedia, wireless communication and automotive electronics. The visual computing division develops graphics and special effects and creates animation films.
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