TELX trades at 20.2/17.3x FY19/20E and at PEG of 1.1x, vs. midcap IT at 1x. Based on 22x Sep-19E (<20% premium to historical 1-yr P/E of 18.5x), fair value is Rs 1,870, supported by industry leading RoE (34%) and strong cash generation (60% OCF/EBITDA and 80% FCF/PAT). Tata Elxsi (TELX) is a USD 200mn ER&D; company (12% of HCLTs ER&D; revenues), operating predominantly in the Automotive and Media verticals (75% of revenue). Given its niche capabilities and sticky franchise, we believe that TELXs valuation premium over the IT sector will continue. We see revenue/profit growth at 15/19%, which is 1.7/3.0x IT sector metrics over FY17-19E.