Ticker: TATAELXSI | CMP: ₹4,900 | Market Cap: ₹30,522 Cr | P/E: 38.9x
🔍 Latest Quarterly Highlights (Latest Q4 FY2025 Results)
- Revenue: ₹908.3 Cr, flat YoY (+0.3%) and down 3.3% QoQ
- PAT: ₹172.4 Cr, down 12.4% YoY and 13.4% QoQ
- EBITDA Margin: 22.9%, vs 28.8% in Q4FY24
- PBT Margin: 23.3%, down from 27.9% YoY
- EPS: ₹27.68, down 12.5% YoY
- Dividend: Final dividend of ₹75/share (Dividend yield ~1.53%)
📊 Annual Financial Summary (FY2025)
- Revenue: ₹3,729 Cr, +5.0% YoY
- PAT: ₹784.9 Cr, -0.9% YoY
- PBT Margin: 26.3%
- ROE: 29.3%, ROCE: 36.2%
- Book Value: ₹459/share
- Debt: ₹192 Cr (Debt-free-like status)
- Promoter Holding: 43.9% (Stable)
🌱 Growth Plans and Expansion Strategy
🔹 Transportation
- Signed €50M multi-year SDV deal with European OEM.
- ODC launched with Suzuki Motors and Nidec Corp (Japan).
- Opened Mobility Innovation Centre (TENMIC) and expanded UK SDV design hub in Coventry.
- Focused on EVs, ADAS, SDVs, cybersecurity, and cloud-native vehicle platforms.
🔹 Media & Communications
- Landmark $100M+ multi-year deal with global operator—biggest in company history.
- Secured $10M deal with a global broadcaster for streaming platform.
- Expanded AI offerings (e.g., NEURON platform for network automation).
- Opened Test Automation CoE in Frankfurt.
🔹 Healthcare & Life Sciences
- Multi-year deal with a top-5 medical device firm for cloud-based connected care.
- Strong GenAI integration and automation focus (DENSO, TEcare).
- Opened Robotics Innovation Lab in Frankfurt.
- Signed deals in Europe and the US for AI in diagnostics and digital therapy solutions.
🔹 Aerospace & Defence
- Partnered with HAL, ISRO, CSIR-NAL, and Garuda Aerospace.
- Focus on UAVs, UAM, and eVTOLs under ‘Make in India’ initiatives.
📈 Key Metrics & Operational Trends
| Metric | Q4 FY25 | FY25 | FY24 |
|---|---|---|---|
| Revenue Growth YoY | +0.3% | +5.0% | 14.7% (3yr avg) |
| PAT Growth YoY | -12.4% | -0.9% | 12.6% (3yr avg) |
| EBITDA Margin | 22.9% | 26.1% | 29.5% |
| Attrition Rate | 13.3% | ↑ marginally | ~12% avg |
🌏 Geographic Revenue Mix (FY25)
- Americas: 40.8%
- Europe: 31.4%
- India: 8.3%
- Rest of World: 19.5%
- Top 10 Clients: 54.7% of revenue – moderate concentration risk
🧾 Valuation Outlook
- Current P/E: 38.9x – higher than peers, reflects premium for niche E&RD leadership.
- Price to Book: ~10.7x
- EV/EBITDA: ~29x (based on FY25 EBITDA)
- Dividend Yield: 1.53% – above IT peer average.
- Valuation Justification: Premium tech services (SDV, MedTech, XR, AI), diversified clients, and high ROCE (36.2%) justify partial valuation, but growth slowdown tempers sentiment.
🛠️ CAPEX & Investment Strategy
- Focused on R&D centres (India, UK, Germany), design hubs, AI platforms.
- Investments in XR (Coalesce), SDV platforms, AI/ML, Cybersecurity, and Mobility solutions.
- Capital-light model, with most spends directed at tech IP and client centres.
🪙 Credit & Ratings
- No reported changes in credit rating by agencies.
- Debt levels remain minimal (₹192 Cr), maintaining a strong balance sheet.
🧮 Long-Term Projection (Illustrative)
| Year | Revenue (Cr) | EPS (₹) | Implied Price (₹)* | CAGR Return (%) |
|---|---|---|---|---|
| FY2030E | ~6,500 | ~230 | ₹6,900 – ₹7,800 | 7% – 10% |
| FY2035E | ~10,000 | ~370 | ₹10,000 – ₹13,000 | 8% – 11% |
| FY2040E | ~14,500 | ~550 | ₹15,000 – ₹18,000 | 8% – 10% |
| FY2045E | ~19,000+ | ~700+ | ₹19,000 – ₹22,000 | 7% – 9% |
*Assumes P/E de-rates modestly to 30–35x with maturing growth profile.
Base Case CAGR returns: 8–10% over 15–20 years.
✅ Conclusion & Investment View
Tata Elxsi remains a high-quality R&D-led digital engineering stock with strong positioning in:
- Software-defined vehicles (SDVs)
- Digital health
- Media tech automation
- Aerospace innovation
While FY25 showed a muted performance (flat earnings, margin dip), the strong deal pipeline, sectoral leadership, and investments in high-growth verticals make it a compelling long-term compounder.
🔵 Ideal for long-term investors with a 10–20 year horizon looking for high-quality tech exposure.
⚠️ Disclaimer
This research report is for informational purposes only and does not constitute investment advice or a recommendation to buy/sell any securities. Investors should consult with their financial advisor before making any investment decision.
Leave a Reply
You must be logged in to post a comment.