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RESEARCH REPORT ON ARTIFICIAL INTELLIGENCE
What is Artificial Intelligence?
Think of artificial Intelligence as a simulation or a system where we have built smart machines, computers and robots. These smart machines are capable of performing tasks at a much faster speed, with greater accuracy without any human intelligence or interference. AI-enabled systems are so smart that they are able to take decisions on your behalf. Basically, a world where human intelligence or intervention is not required. While this might sound futuristic, we are surrounded by AI:
o Siri, Alexa, and Google Assistants etc.
o Self-driving cars
o Robo-advisors
o Conversational bots
o Email spam filters
o Netflix or Amazon recommendations etc.
o Drones
o Metaverse equipment like headsets.
Tata Elxsi Ltd
Tata Elxsi Ltd. is one of the most popular AI stock in India. While other companies have recently jumped on the AI bandwagon, Tata Elxsi has been working in the field of AI for the last 25 years. From self-driving cars to video analytics, Tata Elxsi has created unique systems for everything. One of its biggest offering is the Cognitive Video Services Framework. This system helps in personalizing content for users, suggesting new revenue models, automating content analysis etc. Tata Elxsi has also created AI solutions for OTT platforms like –
• Automatic subtitle generation
• Scene, actor recognition
• Content metrics for Ad Analytics
• Screening objectionable content
• Video summary
Tata Elxsi is also working on Metaverse and Internet of Things enabled products and services. With a market capitalisation of Rs 45,212 crore (as of June 20, 2022), Tata Elxsi Ltd. is one of the biggest AI stocks in India. The company has generated spectacular ROE of 37.20% and ROCE of 47.7%. The company is almost debt free and has delivered a good profit growth of 25.80% in the last five years.
Fundamentals
Shareholdings
Technical View
• Assuming the 90 days trading horizon and your above-average risk tolerance, our recommendation regarding TATA ELXSI LTD is ‘Strong Hold’.
Bosch Ltd.
Bosch, a market leader in automotive and industrial technology started developing its AI in 2017. Over time, they have applied AI to Bosch products and services in sectors like manufacturing, engineering, supply chain management, and even electric vehicles. Bosch is developing charging infrastructure for electric vehicles.
The company is almost debt-free with a debt to equity ratio of 0.01. Its revenue has jumped 21% between March 2021 and 2022. But the best part is that its net profit jumped by 153% from Rs 482 crore in March 2021 to Rs 1,217 crore in March 2022.
Fundamentals
Shareholdings
Technical View
• Buy Bosch ltd. At 17000 at the target of 18600 & stop loss of 16200
Kellton Tech Solutions Ltd.
Kellton Tech Solutions Ltd. is a small-cap artificial intelligence stock with a market capitalisation of Rs 596 crore (as on June 20, 2022). It is majorly into software development, digital commerce and marketing, platform and product development, technology consulting, and testing etc. The company has also launched KLGAME, an IoT solution that uses Bluetooth technology to curate rich user experience for its clients.
The company has managed to increase its revenue by 9% to Rs 843 crore. However, its net profit has dropped to 70 crore from 71 crore in March 2021. The company has generated decent ROE of 15.70% and ROCE of 17%. The stock is currently in the undervalued zone as its PE of 8.46 is less than the industry PE of 26.60.
Fundamentals
Shareholdings
Technical View
• Buy Kellton Tech Solutions Ltd. at 66 at the target of 80 & stop loss 58
Happiest Minds Technologies Ltd.
Happiest Minds has invested heavily in the artificial intelligence and machine learning sector. The company provides deep learning, predictive analysis, statistical modeling, and data mining. It is also a market leader in video processing and video analytics with expertise in –
• Face detection
• Person tracking
• Object identification
• Image tagging
As part of its natural language understanding system, it creates custom APIs to facilitate speech, voice recognition, text mining, conversational bots, and information extraction etc. In the augmented and virtual reality segment, it works on HoloLens, fashion and retail, automotive, augmented maps and data visualization in VR.
In terms of financials, the company has generated a revenue of Rs 1,034 crore in March 2022. This is a jump of 36% from its March 2021 numbers. Its net profit numbers are also jumped by 15% to Rs 186 crore in March 2022. The company has delivered an outstanding CAGR profit growth of 112% in the last five years.
Fundamentals
Shareholdings
Technical View
• Buy Happiest Minds between 950-1000 at the target of 1300 & stop loss of 810
Zensar Technologies Ltd
Zensar Technologies Ltd. is a leading digital solutions company with focus on Hitech and manufacturing, consumer services, banking and financial services. The company is investing heavily in new and exponential technology (NeXT), natural language processing, block chain and Internet of Things. Their R&D division, Zensar AIRLabs has filed for 100 patents in the last two years.
The company witnessed slow growth in FY 2022 as its revenue increased by a mere 5% to Rs 1,154 crore in March 2022. However, its net profit grew by a whopping 43% to Rs 130 crore.
As we have said earlier, AI is not the future. It is our present. And it’s time we set our reservations aside and explore how we can profit from the growth in the AI sector. Want to invest in the AI sector but don’t know which AI stocks to invest in? Check out Samco Stock Ratings and invest in best AI stocks. Open a FREE Demat account with Samco Securities, the best stock broker in India!
Fundamentals
Shareholdings
Technical View
• Buy Zensar Technologies Ltd. at 225-230 at the target of 270 & stop loss of 200