TATA ELXSI BUSINESS REPORT CARD

 

TATA ELXSI BUSINESS Q3 FY23 REPORT CARD

Tata Elxsi is amongst the world’s leading providers of design and technology services across industries including Automotive, Media, Communications and Healthcare. Tata Elxsi provides integrated services from research and strategy, to electronics and mechanical design, software development, validation and deployment, and is supported by a network of design studios, global development centers and offices worldwide.

TATA ELXSI Q3 Results and Analysis

• Estimates

• TATA ELXSI Q3 REVENUE

• TATA ELXSI Q3 EXPENSES

• TATA ELXSI Q3 PROFIT 

• Managers Commentry

• My Opinion

• Brokers Report & Target

• Key Business Metrics 

• TATA ELXSI Technicals 

•  REPORT CARD

TATA ELXSI  Q3 Results and Analysis

Estimates

Tata elxsi's revenue from operation expectation was 806.83cr & EPS estimation was - 28.26. Tata elxsi beat EPS expectation by 10.6%

TATA ELXSI Q3 REVENUE

Tata Elxsi's Total revenue jumps from 781.82cr to 836.87 cr, 30.37% YOY growth, and 7.04% QoQ growth.

Software Development & Services shows 27.95% YOY growth & System integration & support increases 64.43% YOY growth.

Highlights of the Quarter Ended 31st December 2022 

• Overall quarterly revenue crosses US$ 100 million for the first time 

•  EBITDA Margin expands to 30.2%, + 9.0% QoQ growth 

• All three segments of EPD, IDV and SIS delivered robust growth of 5.1%, 25.5% and 9.3% QoQ respectively. *

•  Among regions, Europe delivered strong growth of 8.9% QoQ, followed with US at 6.3% QoQ

.

** The larger business segment – Software Development & Services - can be further categorized into Embedded Product Design (EPD) and Industrial Design & Visualization (IDV) divisions.

EPD - Embedded Product Design:

 Provides technology consulting, new product design, development and testing services for the automotive, broadcast, consumer electronics, healthcare, telecom and transportation industries.

IDV - Industrial design and visualization: 

Develop brands and products by using design as a strategic tool for consumer insight, branding, industrial design, visual design & merchandising, design engineering and manufacturing support.

SIS - System integration and support

 

	Dec 31,2022	YOY%	QOQ%	Sep30,2022	Dec 31,2021
Software Development & Services	796.37	27.95%	7.11%	743.54	622.41
System integration and support	21.36	64.43%	8.87%	19.62	12.99
Revenue from Operations	817.73	28.70%	7.15%	763.16	635.4
other Income'	19.13	193.86%	2.52%	18.66	6.51
Total	836.86	30.37%	7.04%	781.82	641.91

 

TATA ELXSI Q3 EXPENSES 

	Dec 31,2022	YOY%	QOQ%	Sep30,2022	Dec 31,2021
TOTAL EXPENSES	596.78	35.12%	6.06%	562.67	441.68
Finance costs	4.47	45.13%	4.93%	4.26	3.08
Cost of material consumed	50.25	125.54%	20.79%	41.6	22.28
Changes in inventories of stock-in-trade	-1.1		3566.67%	-0.03	0
Employee benefrts expenses	410.71	24.65%	4.73%	392.16	329.5
Depreciaton, amortisation and impairment	21.43	52.64%	-1.65%	21.79	14.04
Other EXPENSES	111.02	52.54%	7.90%	102.89	72.78

•  Total expenses increased by 35.12% YOY & 6.06% QOQ growth. 

Cost of material just sky rocket 125.54% jump in yoy its huge. it effects profit margin.

TATA ELXSI Q3 PROFIT 

	Dec 31,2022	YOY%	QOQ%	Sep30,2022	Dec 31,2021
Profit Before Tax	240.09	19.90%	9.55%	219.16	200.24
Profit After Tax	194.68	28.93%	11.71%	174.28	151

Key Business Metrics

• Transportation witnessed stellar growth of 12% QoQ and 33.2% YoY, aided by large deals and market share gains in EV, Software Defined Vehicles, and adjacencies. 

• Healthcare grew at 28.4% YoY, driven by new product engineering, digital health, and regulatory services. 

• Media and Communications grew 14.7% YoY in a challenging quarter for the industry, aided by new wins in Android TV and AdTech, and platform-led deals with operators. 

• Among regions, Europe delivered strong growth of 8.9% QoQ, followed by the US at 6.3% QoQ.

DATA 

Managers Commentry

• According to Mr. Manoj Raghavan, CEO and Managing Director, Tata Elxsi, they have delivered a steady growth in a sessionally challenging quarter, they also observed that a strong and sustained growth in the Automotive and adjacent segments in Transportation, led by their differentiated EV and digital capabilities.

• Not only this, they have won multi-year deals in EV and Software Defined Vehicle architectures in the automotive space, and a strategic entry into a global OEM software organization.
  

• But , both their Healthcare and Media & telecom business saw some impact of delayed decision-making, furloughs and a short quarter. Though they have done well to protect their business and position themselves strongly for upcoming strategic deals.

• In the Media and Telecom vertical, they have won strategic platform-led deals with operators in media and communications, and new wins especially in the AdTech space. 

• The Healthcare & Lifesciences vertical saw new product development deals including a Renal Home care platform for a leading US medical device company.

DATA 

My Opinion

Tata elxsi has won several multi year deal that will reflect their balance sheet later, But macro economic Factors will lead any recovery is most likely to be gradually. Tata Elxsi delivers CAGR 24% in last 3 years if it continues than it will be a good stock for long term. 3 years Median PE is 62.4 now PE 57.3, with 24% CAGR growth of a company with -57 PE is a decent Valuation. If you can get it under 50 PE, it will be a gem for you.

NOTE:- This is clearly my opinion, I am not a SEBI registered advisor, and I also have Tata Elxsi If you want you can ignore this.

Brokers Report & Target

After Q3 results Tata elxsi faces mixed reaction via brokers. 

Targets of several brokers

• HDFC Securities  - 6000 (SELL)

• KRChoksey - 8884 (BUY)

• Geojit BNP Paribas  - 7611 (Accumulate)

• Morgan Stanley - 5800

• Sharekhan - 6185

 

According to Morgan Stanley - Embedded Product Design (EPD) business slowed for a st.5th quarter affected by furloughs & project deferments while commentry is balanced. Cost Normalisation & ESOP costs Should keep margin expectations in check.

TATA ELXSI Technicals 

RESISTANCE

R1	6660.63
R2	6733.02
R3	6787.03
SUPPORT
S1	6534.23
S2	6480.22
S3	6407.83

REPORT CARD