Tata Elxsi Ltd. share price target

Quality Oriented Approach Leading to a Performance Boost; RecentlyEntered Ventures to Further the Growth Story: Revenue for Tata Elxsi (TELX) in FY17 was recorded at Rs. 12,330 Mn registering a growth of 14.7% YoY. ForQ4FY17, TELX recorded revenue of Rs. 3,260 Mn, marking a sequential growth of 5.4%. EBITDA margins for FY17 were further strengthened and were recorded at 23.8%, marking an increase of 80 bps YoY. The company recorded growth in volumes by about 8.0% QoQ for Q4FY17. The constant currency revenue growth for FY17 was close to 21.0% YoY.

Revenue rose by 5.38% to Rs. 326.05 Cr in Q4FY17 when compared to the previous quarter. Also it increased by 10.92% when compared with Q4FY16.

Revenue grew by 2.01% to Rs. 309.39 Cr in Q3FY17 when compared to the previous quarter. Also, it grew by 12.88% when compared with Q3FY16.

We met the management of Tata Elxsi (TATELX) to get into the insights of business and its future plans. Company's core segments are Software Development services (SDS) and System Integration (SI) which contributed 95% and 5% to TATELX revenues respectively in FY16. In SDS, ~80% of revenues are derived from embedded product development (EPD), followed by industrial design (ID) & visual computing labs (VCL) contributing 20% to SDS revenues. Within EPD, TATELX caters to 3 core industries automotive (~40% of EPD revenues), broadcast &...

Results in line: Revenue grew 27% YoY to INR2,940m (vs. our estimate of INR2,891m), led by Embedded Product Development (EPD) division (up 27% YoY) with a revenue contribution of 79%. EBITDA grew 42% YoY to INR672m...

Tata Elxsi's niche presence in the high growth and high margin embeddedproduct development market: Tata Elxsi's embedded product developmentaccounts to about 70% of the total revenues. We expect the revenues to grow at a CAGR of 17%, led by CAGR growth of 18% in software and development business and about 5% CAGR growth in system integration over FY15-FY17E. Within Software development business, we expect transportation to post a CAGR of 16%, broadcast to post growth of 15% CAGR over FY15-17E.