Tata Elxsi Ltd. share price target

Revenue increased by 8.64% to Rs. 375.38 Cr in Q4FY18 when compared to the previous quarter Tata Elxsi Ltd Q4FY18 results Comment

TEL performed impressively yet again in 4QFY18 with healthy growth in SDS business. We expect healthy growth to continue, as TEL focuses on driving growth in high-margin SDS business through focus on niche verticals and services. We believe TEL is a very good long-term investment opportunity, given presence across fast-growing solutions, niche operational areas, design expertise, marquee client base, pricing power, operating leverage, healthy cash flow, returns on capital, and strong earnings growth. At the CMP, the stock trades at a PE of 25.6x/22.4x FY19E/FY20E EPS, respectively. We expect TEL to command 25x forward earnings, at a premium to most companies in the sector in light of superior growth and operating metrics. Upgrading...

Industry Leading Margins Supplement Growth Prospects;Efficient Execution of the Long Term Strategy to be a Key: Better geographical & service mix during Q3FY18 led to a significant improvement in EBITDA margin of 317 bps, coming in at 27.1%. We expect the long termsustainable EBITDA margin rate to be ~ 25%, going forward.

TELX's overall revenue grew 11.4% YoY to INR3,455m (our estimate: INR3,651m) in 3QFY18, led by 14% YoY growth in Software Development & Services business. However, System Integration business declined 40% YoY. EBITDA margin expanded 410bp YoY to 27.1% (our estimate: 24.4%) in 3QFY18, which can be largely attributed to product mix change. Additionally, employee expense declined 230bp to 53.2% of net sales in 3QFY18. EBITDA grew 31% YoY to INR935m (our estimate: INR891m). Other expenses declined 120bp YoY to 15.3% of net sales. Other income stood at INR68m, higher than our estimate of INR13m and INR24m in 3QFY17, leading to earnings beat. PAT grew 42.2% YoY to INR628m (our estimate: INR549m) in 3QFY18

Tata Elxsi (TEL) has posted a strong performance in 3QFY18. with EBITDA margin rising by 250bps QoQ and 407bps YoY to the highest-ever level of 27.1%. In absolute terms, its EBITDA rose by 11.3% QoQ and 31.1% YoY owing to higher share of Software Development & Services (SDS) business to the total revenue. This segment which grew by a healthy 3.7% QoQ and 13.5% YoY to Rs3.36bn contributed >97% to TEL's total revenue (the highest level) led by TEL's presence in specialised services including Auto Electronics, Autonomous Cars, Software-defined Networking in Broadcasting, VR/AR experiences, Digital and IoT. On the flip side, revenue from Systems Integration & Support (SIS) segment declined by a steep 48.5% QoQ and 39.9% YoY owing to...

Tata Elxsi Ltd Q3FY18 results comment Revenue rose by 0.99% to Rs. 345.54 Cr in Q3FY18 when compared to the previous quarter

We recently attended the analyst meet of Tata Elxsi (TEL). The key highlights of the meet are: - i) TEL is a focused play on the automotive & broadcasting verticals where technologies are evolving at a rapid pace, ii) TEL made an announcement on licensing its advanced autonomous vehicle platform AUTONOMAI to one of the world's top five automotive OEMs for their driverless car R&D; and iii) cash & cash equivalent of | 251.5 crore would be utilised for inorganic growth. Focused players on technological evolving verticals...

We recently attended the analyst meet of Tata Elxsi (TEL). The key highlights of the meet are: - i) TEL is a focused play on the automotive & broadcasting verticals where technologies are evolving at a rapid pace, ii) TEL made an announcement on licensing its advanced autonomous vehicle platform AUTONOMAI to one of the world's top five automotive OEMs for their driverless car R&D; and iii) cash & cash equivalent of | 251.5 crore would be utilised for inorganic growth. Focused players on technological evolving verticals...

At its analyst meet, Tata Elxsi articulated its strategy to drive sustainable growth with a focus on Automotive, Broadcast & Communications and Healthcare verticals. It continues to strengthen its go-to-market and delivery capabilities (key...

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.