Tata elxsi


(Arnab) #21

Some interesting article on elxsi’s website :

http://www.tataelxsi.com/whats-new/News/tatas-new-elxsi-r-wearables-deccan-chronicle.html

May be there are more interesting stories in the pipeline to get excited about the company …


(Hemant V Bhatia) #22

Madhukar Dev MD and CEO of the co addressed the call.Highlights by Capital Mkt:

June 2014 quarter was a quiet quarter for the company.On sequential basis, Tata Elxsi registered 10% fall in its consolidated sales to Rs 190.76 crore for the quarter ended June 2014. PBT fell 13% to Rs 30.92 crore. PAT fell 5% to Rs 20.79 croreOn y-o-y basis, sales grew 10% PBT grew 123% and PAT was up 133%

In system Integration business the company saw huge fall in sales from Rs 30 crore in June 2013 quarter to Rs 14 crore in June 2014 quarter.The company is having renewed focus on The Japanese market and has made changes in Japan's sales structure. With new Japanese PM and more and more Japanese companies looking at India, the company wants to avail of the opportunity. Though these are early days the company has already started to see good potential for growth from Japan.

As per the requirement of the provisions of Schedule II of the Companies Act, 2013 (the "Act"), the management has decided to adopt the useful lives as suggested in Part C of Schedule II of the Act, with effect from April 1, 2014 for all its fixed assets. Accordingly, an additional depreciation of Rs.2.90 crore has been recognized for the quarter in the statement of profit and loss.

EPD revenue increased 25%. In EPD business, Transportation and Broadcast accounted for 35-40%. And the rest were shared equally by Medical and Communication.Profit margins have been steady in the last 6 quarters and the management will strive to keep it that way.The company's internal sales target was Rs 3000 crore for FY 2018 but this seems to have been delayedby two quarters. Now the company hopes to achieve this in Mid FY 2019.The company was expecting to grow by 40% from FY 2016 but even that has been delayed by two quarters.

Current employee strength is 4200 which is likely to see addition of 1000.


(Hemant V Bhatia) #23

**Madhukar Dev MD & CEO of the co add the call.**Highlights by Capital Mkt;

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On sequential basis, Tata Elxsi registered 8% rise in its consolidated sales to Rs 221.49 crore for the quarter ended December 2014. PAT rose 21% to Rs 28.60 crore.

For the nine months ended December 2014, consolidated sales grew 10% to Rs 618.13 crore. PBT grew 42% to Rs 110.50 crore.

Q3 was steady, nothing spectacular.Focus was on growing profitable revenues.

Q3 is traditionally weak quarter.Embedded Product Design and Industrial Design both showed good growth.Growth is coming from existing OEM and Tier I customers.

The company has seen good growth in Transportation and Broadcast segment.

Transportation segment saw decent growth. Existing accounts in car connectivity solutions had good growth.

In the Broadcast segment the company is working with operators and set top box manufacturers. This business has witnessed good growth in US, Europe, India and South Africa. In this business the company has added new customers and has seen growth in existing customers.

The growth in service business was driven by volume increase. There was minor exchange loss of Rs 1 crore. Thus q-o-q the growth was all volume based. Europe accounts for 38% and US is also about the same. Rest is from India and Asia.

Transport segment accounts for 47% and Broadcast accounts for 30%.

The company’s first target is to get back on 30% y-o-y sales growth rate. The company has made efforts and with some more work it should be able to get there.

It should be able to get there in next two and a half to 3 years.

The company has invested in sales team. It expects the sales growth of 20% sooner than later.

The management will be happy if it is able to maintain the current OPM.

Due to less overseas deployment of engineers expenses have fallen a bit.

In the third quarter attrition was 17% annualized and utilization was 71-72%.

Hired 300 odd people and will employ 300 more in March 2015 quarter.

The company is in good position to avail of the Digitization India imitative of the government


(bomi karkaria) #25

Whats happening to Tata Elxsi? Volumes are up for the past 1 week (with just about 14% delivery) and so is the price. Today it was 20% UC. Other forums have rumors that the scrip is going to be added to the F&O segment, but would that drive up the price so much? Can anyone explain why F&O inclusion should influence such a steep upward movement from 800 odd to 1300 in a 7-10 days?

Discl: Not invested, but tracking since a year. I was expecting the co. to announce a bonus last March, it being its 25th year, but it did not.


(Nagarajan G) #26

It’s good to note that the Engineering Services outsourcing is picking up pace and this trend can be corroborated with the performance of listed companies in this space like Cyient, Tata Elxsi, Mold Tek Technolgies (Building Information Modeling as the growth driver) and the non-listed entities like Quest Global,Tata Technologies etc. Most of these companies have started their operations in early nineties and looks like they are seeing increased traction from US, Europe and Japanese companies.

Discl: Invested in Tata Elxsi


(Ishaan Gupta) #27

@Nag_Hyd The company has been fairly consistently upping its earnings since sep 2012 but I wonder of this type of engineering services outsourcing will become large scale mainstream business like IT services has become.

Also I still continue to think that this competes with some arms of TCS. How do they resolve that internal conflict?

My review of the company is at: http://www.igvalue.com/2014/03/tata-elxsi-high-tech-history-but-lots.html

Cheers.


(Nagarajan G) #28

Ishaan,

Here is my take:

One of the major barriers for Engineering Services Outsourcing is Intellectual Property management. A company like Tata Elxsi with internal processes /governance in place has moved up the value chain to overcome this bottleneck and is evident from the results.

Businesses with R&D budget challenges and shorter product life cycle constraints would be pushed to outsource :slight_smile: . Value Migration is at work here similar to what has happened with mainstream IT Services & Pharma.

Tata Elxsi is also a play on Internet of Things (M2M communication - Connected Devices). Gartner predicts that there would be nearly 26 billion connected devices, with a global economic value-add of $1.9 trillion by 2020.

Yes, I agree that there are certain business divisions that overlaps with TCS. I think that some kind of restructuring will happen and not sure whether it would follow the footsteps of Tata Infotech and CMC :slight_smile:

Discl: I am invested in Tata Elxsi


(Manish) #29

This stock has done great in past one year but this thread has no updates since past 1 year. The company looks poised for growth & futurist sectors like Device Embedded software, Auto Infotainment systems, Driverless cars and many more.

Share your comments on this wonderful IT company.

Disclosure: I am invested in the stock.

Warm Regards

Manish Shah


(kailasp4u) #30

The growth has been visible as originally envisaged in starting thread by Hitesh. Presentation at investor summit is also excellent. But no mention of future orders and current order backlog. At TTM P/E of about 45, can it sustain if markets fall?
Today it fell 5% for no visible reason. Shall we take it as normal correction?


(Hemant V Bhatia) #31

Highlights of the call by Capital Mkt
On sequential basis, Tata Elxsi registered 11% rise in its consolidated sales to Rs 269.66 crore for the quarter ended September 2015.OPM fell 30 basis points from 23.0% to 22.7% which saw OP rising 9% to Rs 61.28 crore.PBT rose 7% to Rs 58.31 crore.PAT rose 7% to Rs 38.10 crore.On y-o-y basis, sales jumped 31% and OPM rose 240 basis points from 20.3% to 22.7%. OP was up 47%. PBT grew 66% and PAT was up 61%.
Embedded product design (EPD) accounted for 80.9% of sales.Industrial design (ID) accounted for 12.3% of sales.System Integration accounted for 6.0% of sales.Visual computing Labs accounted for 0.80% of sales.For the six months ended September 2015, Tata Elxsi registered 28% rise in its consolidated sales to Rs 507.18 crore.OPM improved 240 basis points from 20.0% to 22.4% which saw OP rising 43% to Rs 113.60 crore.Other income jumped 191% Rs 210.28 crore.Other income includes Rs 4.3061 crore forex gain against a loss of Rs 39 lakh.PBT rose 71% to Rs 112.91 crore.PAT rose 66% to Rs 73.82 crore.
For the six months, Embedded product design (EPD) accounted for 80.5% of sales.Industrial design (ID) accounted for 11.9% of sales.System Integration accounted for 6.7% of sales.Visual computing Labs accounted for 0.90% of sales.On y-o-y basis, sales jumped 31% and OPM rose 240 basis points from 20.3% to 22.7%. OP was up 47%. PBT grew 66% and PAT was up 61%.
Of the increase in employee cost, around 85% rise is due to salary revision effected from July first. Rest was due to change in offshore/onsite mix and rise in head count.Current head count is 4500.For the six months ended September 2015, Tata Elxsi registered 28% rise in its consolidated sales to Rs 507.18 crore.OPM improved 240 basis points from 20.0% to 22.4% which saw OP rising 43% to Rs 113.60 crore.Other income includes Rs 4.3061 crore forex gain against a loss of Rs 39 lakh.PBT rose 71% to Rs 112.91 crore.PAT rose 66% to Rs 73.82 crore.The quarter was steady for EPD business. Main component for EPD business is transportation and broadcasting business.Transportation business saw good spread in customers and geographies. The company diversified revenue mix in this segment.Broadcast business saw good traction in OEM and tier I customers.Utilization rate little less than 75% during the quarter. So there is a little bit of head room, not too much.Margins won’t be very different in next few quarters.The company is seeing good opportunity in health care.The management does not see any cause for alarm regarding growth rates going forwards vis a vis current growth rates.


(Lakshmi Narayana) #32

Once again Excellent results from ELXSI for DEC quarter

Revenue 274.08
Net Profit 39.90
EPS 12.81
OPM % 24.56
NPM % 14.56

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/6C88A488_2574_49D8_97D5_604050337536_131341.pdf

And Conference call is on 01/23

http://corporates.bseindia.com/xml-data/corpfiling/AttachHis/B83F7A50_04B3_4F9D_890F_387B9A494205_153139.pdf


(Manish) #33

Q-on-Q number were flat. Since the stock is trading 50PE multiple i think stock looks expensive.


(Lakshmi Narayana) #34

Generally IT companies have muted growth in December quarter. YOY growth is excellent
yes it is fairly valued around @ 33PE for FY16 - Est NP 160 CR fro FY15-16


(Vishnu Ch) #35

CONFERENCE CALL - from Capital Markets

Tata Elxsi

Embedded Product Design revenues have grown 6% q-o-q and most of it has come from broadcast and transportation

Tata Elxsi held its conference call on 22 January 2016 to discuss results for the quarter ended December 2015.
Madhukar Dev, Managing Director & CEO addressed the call.

Highlights of the call:

The company had a fairly steady quarter.

Service business growth was better than the overall growth which had favourable growth in PBT and PAT.

On sequential basis, Tata Elxsi registered 4% rise in its consolidated sales to Rs 274.07 crore for the quarter ended December 2015. OPM improved 100 basis points from 23.2% to 24.2% which saw OP rising 8% to Rs 66.35 crore

Other income crashed 64% Rs 96 lakh. Other income includes Rs 1.29 crore forex loss against a profit of Rs 72 lakh.

PBT rose 6% to Rs 61.59 crore. PAT rose 5% to Rs 39.90 crore.

On y-o-y basis, sales jumped 24% and OPM rose 140 basis points from 22.8% to 24.2%. OP was up 31%. PBT grew 39% and PAT was up 40%.

For the nine months ended December 2015, Tata Elxsi registered 26% rise in its consolidated sales to Rs 781.25 crore. OPM improved 200 basis points from 21.00% to 23.0% which saw OP rising 38% to Rs 179.94 crore

Other income jumped 142% Rs 11.24 crore. Other income includes Rs 3.01 crore forex gain against a loss of Rs 2.17 crore.

PBT rose 58% to Rs 174.50 crore. PAT rose 56% to Rs 113.72 crore.

During the quarter Embedded Product Design accounted for 82.6% of total sales.

Industrial Design accounted for 12.0% of total sales.

System Integration accounted for 4.5% of total sales.

Visual Computing Labs accounted for 0.9% of total sales.

During the nine months Embedded Product Design accounted for 81.2% of total sales, Industrial Design accounted for 12.00% of total sales, System Integration accounted for 6.0% of total sales and Visual Computing Labs accounted for 0.9% of total sales.

Quarter performance was as expected.

There was progress on initiatives launched during the past few quarters.

There was nothing spectacular or adverse but a steady quarter as expected by the company.

EPD revenues have grown 6% q-o-q and most of it has come from broadcast and transportation.

In broadcast business lot of business comes from operators which saw steady business. The company saw traction coming from gateway business as they are focused on internet revenue especially in US and Europe.

In transportation business there was traction from OEM.

Employee count currently is 4600 same as last quarter. It does not have any specific plan to hire x number of more employees.

The company has handful of new customers whose revenue contributions was small. Will have to see how the performance is going forward.

The engineering part of the auto industry is showing more opportunity. Finance and purchase part of the auto industry is having cut back on spending.

Europe had higher contribution to revenue. US had less contribution compared to Q2 and rest of the world remained the same.

Japan is yet to see revival in interest of auto companies and Japan is a slow moving business. In Q2 the company took initiative of increasing its sales presence in Japan. It would need couple of more quarters to see the results.

There was a marginal improvement in OPM. The management does not think it will rise further beyond this.

The company had given Rs 3000 crore revenue guidance few quarters ago. It feels that if it grows at 30-35% every year it should reach there in few years. EPD and industrial design business will be the key growth driver. Industrial design business accounts for very small business currently

Capex estimate is small at about Rs 4 crore for March 2016 quarter.

The company does not do much business with the government. It is looking at opportunity of doing design work like it did with Bangalore metro and Kochi metro which increase passenger satisfaction.

The company has done some work with DRDO.

Utilization is 75% and attrition is lower from 16% in Q2 to 15% in Q3. This does not necessarily reflect a trend. This is not a quarter of high attrition traditionally.

Industrial designs business was slow as compared to previous 2 quarters. But this will be sorted out in the current or next quarter.

Fixed Price Projects accounted for 35% of sales and time and material accounted for 65%.

Onsite revenues accounted for 35% of sales and offshore business was 65% of total sales.


(NaMo) #36

Tata Elxsi is eying IoT opportunities in pharma space
http://www.pharmabiz.com/NewsDetails.aspx?aid=93120&sid=1
By 2020, the government of India plans to create US$ 15 billion Internet of Things (IoT) industry.


(Dhinakaran) #37

There has been a surge in the profit margin in last two years. Could some one help me to understand how the management is able to achieve this?


(Lakshmi Narayana) #38

Hello Dhinakar,

Please go through the tread for better understanding, at high level they have some loss making business subsidiaries before 2013- 2014.
And they are doing quite good in last 3 years and they are expecting to grow at 30%CGR for next 3yrs also.

Please read AR also for good understanding of busines

@CMP Stock was richly valued

Disclosure: Invested


(NaMo) #39

Circular in NSE website says Tata Elxsi will be included in F&O segment from 26th February 2016. Please see below link http://www.nseindia.com/content/circulars/FAOP31700.pdf :grinning:


(Vishnu Ch) #40

CONFERENCE CALL - from Capital Markets

Don’t see any pressure on margin

Tata Elxsi held its conference call to discuss results for the quarter and year ended March 2016. Madhukar Dev, Managing Director & CEO addressed the call.

Highlights of the call:

  • The company had a fairly steady quarter.

  • On sequential basis, Tata Elxsi registered 7% rise in its consolidated sales to Rs 293.95 crore for the quarter ended March 2016. OPM fell 140 basis points from 24.2% to 22.8% which limited OP growth to just 1% to Rs 67.15 crore. PAT rose 3% to Rs 41.09 crore.

  • On y-o-y basis, sales jumped 27% and OPM rose 240 basis points from 20.5% to 22.8%. OP was up 42%. PAT was up 38%.

  • For FY16, Tata Elxsi registered 27% rise in its consolidated sales to Rs 1075.21 crore. OPM improved 210 basis points from 20.9% to 23.0% which saw OP rising 39% to Rs 247.09 crore. PAT rose 52% to Rs 154.81 crore.

  • For FY16, 90% of growth is due to volume and 10% is due to exchange rate.

  • During the quarter Embedded Product Design accounted for 79.1% of total sales. Industrial Design accounted for 12.6% of total sales. System Integration accounted for 6.9% of total sales. Visual Computing Labs accounted for 1.4% of total sales.

  • During FY16, Embedded Product Design accounted for 80.6% of total sales, Industrial Design accounted for 12.1% of total sales, System Integration accounted for 6.2% of total sales and Visual Computing Labs accounted for 1% of total sales.

  • The management said that last quarter was challenging as few big projects were coming to end, but the company was able to start new engagements with the same customer organization and ability to scale up, had positive impact in Q4.

  • The company faced few challenges like exchange rate with respect to British Pound, which had impact on bottom-line.

  • All geographies did quite well leaving EU.

  • System Integration had fair amount of revenue related to hardware brought and sold in the quarter. The increase in this business had negative impact on margin.

  • Service business had reasonable growth, which had favorable impact on bottom-line

  • Embedded business grew 3% QoQ, slightly less than earlier quarter due to unfavorable exchange rate in UK.

  • Embedded business is 80% of software development. In Embedded business – 55% is from transportation, 30% is from broadcast and rest from communication and system.

  • In healthcare – the company had small engagement with few more customers. One of customer from US, the company had engagement form initiation to launch of that company products. Also the company was only vendor services for that customer. As such, the company expects to grow engagement with that customer with its products growth.

  • IPs - lot of IPs are ready to deploy. 2 smaller IPs are doing in-house trial. In one to 2 quarters, the company will share IPs’ marketability and its readiness.

  • No of employees are 4700 employees, out of it 400 overseas and 4300 here. During the year, the company will take around 800- 900 Jr. engineers in first 6-7 months itself and lateral will be hired on an avg. around 75-100 per quarter.

  • Auto growth is twice as much as broadcast business. In broadcast, deal pipeline stronger than in last 3 quarters. With some of new initiatives and working in OTT service, broadcast look promising. Auto continues to be very exciting.

  • Utilization rate is around 75%. No headroom for squeezing out more efficiency.

  • The mgmt said that it is renewing strategy for its incumbent program.

  • The company’s highest order from any customer is still under $ 10 mn.

  • The mgmt said that by 2022, $1 bn sales, doesn’t look any more like fairy tale.

  • EU continues to be largest market, contributing 40% of revenue followed by US around 37-38%. India has picked up significantly, between Indian and Rest of Asia seen good uptake. In coming years, expects to see significant performance from Japan.

  • The mgmt said that there can be opportunities in other areas like it had in auto and broadcast. During current financial year, it will be able to identify and start work in one new area which had potential to become big.

  • The mgmt said that at present it is not worried about margin and is doing everything to maintain margin.

  • Outcome based projects generate 35% of revenue.

  • The company get sizeable amount of revenue in Pounds, Euro, Dollar and INR.

  • The average duration of project is around 7-9 months.

  • In most of the contracts, IP belongs to customer. If the company sees some value, then the company forgo some revenue and get ownership of IP.

  • System Integration – it will be 5% of revenue going ahead


(Vishal Bharti) #41

“The mgmt said that by 2022, $1 bn sales, doesn’t look any more like fairy tale”.

==> with previous year sales ~1075 cr , this simply means increasing revenues 6x in next 6 years! i.e. ~35% CAGR in revenues!!!

Good time to ride this midcap!