Tata Elxsi Limited’s (NSE:TATAELXSI) Price Is Out Of Tune With Earnings
When close to half the companies in India have price-to-earnings ratios (or “P/E’s”) below 25x, you may consider Tata Elxsi Limited (NSE:TATAELXSI) as a stock to avoid entirely with its 45.5x P/E ratio. Nonetheless, we’d need to dig a little deeper to determine if there is a rational basis for the highly elevated P/E.
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While the market has experienced earnings growth lately, Tata Elxsi’s earnings have gone into reverse gear, which is not great. One possibility is that the P/E is high because investors think this poor earnings performance will turn the corner. If not, then existing shareholders may be extremely nervous about the…
