Tata Elxsi Target Price: Sell Tata Elxsi, target price Rs 7050: HDFC Securities
[ad_1]
Tata Elxsi Ltd., incorporated in the year 1989, is a Mid Cap company (having a market cap of Rs 51471.79 Crore) operating in IT Software sector.
Tata Elxsi Ltd. key Products/Revenue Segments include Software Development Charges and Traded Goods for the year ending 31-Mar-2021.
Financials
For the quarter ended 31-03-2022, the company reported a Standalone Total Income of Rs 699.83 Crore, up 9.02 % from last quarter Total Income of Rs 641.92 Crore and up 33.24 % from last year same quarter Total Income of Rs 525.22 Crore. Company reported net profit after tax of Rs 160.01 Crore in latest quarter.
Investment Rationale
Tata Elxsi (TELX IN) delivered a strong Q4, with 7.4/30.9% QoQ/YoY growth, and closed FY22 with 34% growth. Growth was broad-based across EPD/IDV and, within EPD, across the verticals of transportation, media & communications, and healthcare. Management commentary on demand, pipeline, and hiring remains strong. Over the past two years, TELX has doubled its profit (FCF up >75%), with EBITDAM catapulting from 21% in FY20 to 31% in FY22, supported by superior delivery metrics (offshore-led and lower sub- con dependence). From here on, the brokerage expects the EPS to double over three years (revenue-led), with steady margins and ~40% RoCE. Yet, these base case assumptions seem adequately priced in and there’s a low margin of safety at 56x FY24E; the implied USD revenue growth rate over FY22-31E is ~25% CAGR at current valuation. It maintains SELL, with a TP of INR 7,050, valuing TELX at 50x FY24E EPS. TELX’ valuation premium builds in growth premium (both absolute and relative), delivery strengths, a strong balance sheet, and efficiency metrics.
Promoter/FII Holdings
Promoters held 44.08 per cent stake in the company as of 31-Mar-2022, while FIIs owned 13.15 per cent, DIIs 4.94 per cent.
(Disclaimer: Recommendations given in this section or any reports attached herein are authored by an external party. Views expressed are that of the respective authors/entities. These do not represent the views of Economic Times (ET). ET does not guarantee, vouch for, endorse any of its contents and hereby disclaims all warranties, express or implied, relating to the same. Please consult your financial adviser and seek independent advice.
[ad_2]
Source link
