Tata Elxsi: A Long-term leader Actionable At The current level?

Posted Date: July 26 2021 | Reading Time: 5 Minutes

Tata Elxsi stock has broken out of a 7-week, 17% deep Cup Without Handle Base 3-weeks ago. However, the stock is still worth watching as the current price is only 3% away from the ideal buy price of INR 4090.

 

The stock closed in red for the week, but on a lower volume. It was down -1.3% on a -39% lower volume than the 10-week average. You want to see a strong close on heavy volume before initiating a position. That signals institutional buying. But do not conclude anything just based on this week’s action. A prudent approach would be to watch the price volume momentum in the coming trading sessions.

 

The key trend lines, 10 and 40-week moving averages are at a comfortable position. The current trends of both the averages are upward and the 10-week moving average is trending above the 40-week moving average. The current price of the stock is trading around 5.48% away from the 10-week moving average.

 

Tata Elxsi has been an outperforming stock as compared to the broader market. It has a strong Relative Strength Rating of 84. In the last twelve months, the stock has rallied over 367.8% as compared to 43.8% for the Nifty500.

 

The RS Line remains in a downtrend for the last four weeks. However, this is not unusual for a leading stock as the stock sets up base for its next leg up or at the very beginning of a new trend. At this point, the overall long term trend of the line is upward. If Tata Elxsi can maintain a healthy upward move, it could make sense as a CANSLIM trade.

 

Another key part of the jigsaw is institutional sponsorship. Tata Elxsi has an Accumulation/Distribution Rating of 'A-'. This represents heavy institutional buying over the past 13 weeks. The number of institutional sponsors and shares held by the sponsors, both increased in the last reported quarter.

 

On the earnings front, Tata Elxsi has an excellent EPS Rank of 91, which indicates consistency in earnings. The earnings and sales for the stock have grown by 13% and 9%, respectively over the past three years. Its 3-years earnings stability is 12, on a 0 to 99 scale (lower the better). Over the past five years, the earnings and sales for the stock have grown by 16% and 10%, respectively. The 5-years earnings stability is 10. The return on equity for the last reported year is 30%.

 

The stock belongs to the industry group of Computer Sftwr-Desktop. You would still want to see some improvement in the industry group rank for the group. The current industry group rank is 67. The current price of Tata Elxsi is -8% off from its 52-week high price and 372% above its 52-week low price.

 

The stock appears on our idea lists: Minervini Trend Template.

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