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Tata Elxsi Q1-FY25 Earnings Analysis
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Last Updated: 12th July 2024 - 10:41 am
In first quarter of FY25, Tata Elxsi reported mixed financial results. Despite year-on-year revenue growth, company faced declines in net profit, attributed to higher expenses & increased tax rates. This report provides comprehensive analysis of Tata Elxsi's Q1-FY25 performance, covering key financial metrics, segment-wise performance, & market reactions.
Tata Elxsi Key Financial Metrics
Metric | Q1 FY25 | Q1 FY24 | QoQ Change | YoY Change |
Revenue from Operations | ₹926 crore | ₹850 crore | 2% | 9% |
Net Profit | ₹184 crore | ₹189 crore | -6% | -3% |
Total Expenses | ₹706 crore | ₹624 crore | 13% | 13% |
EBITDA | ₹252 crore | ₹252 crore | -3% | Flat |
EBITDA Margin | 27.20% | N/A | -162 bps | N/A |
Tata ELxsi Detailed Analysis
1. Revenue & Profit
- Revenue from Operations: Tata Elxsi’s revenue grew by 9% year-on-year to ₹ 926 crore from ₹ 850 crore in Q1 FY24. Sequentially, revenue increased by 2% from preceding quarter.
- Net Profit: net profit for quarter fell 3% year-on-year to ₹ 184 crore from ₹ 189 crore. Sequentially, net profit decreased by 6% from ₹ 196 crore.
2. Expenses & Margins
- Total Expenses: total expenses rose by 13% year-on-year to ₹ 706 crore from ₹ 624 crore.
- EBITDA & Margins: EBITDA for quarter stood at ₹ 252 crore, flat year-on-year but down 3% sequentially. EBITDA margin decreased by 162 basis points quarter-on-quarter to 27.2%.
Segment-Wise Performance
1. Transportation
- Growth: transportation sector reported strong growth of 5% quarter-on-quarter & 20% year-on-year in constant currency.
- Contribution: This segment now accounts for more than 50% of Tata Elxsi’s software development & services business.
- Drivers: growth was driven by significant deal wins & ramp-up of Software Defined Vehicle (SDV) engagements.
2. Media & Communications
- Growth: media & communication business grew 0.9% quarter-on-quarter in actual currency & 0.5% in constant currency.
- Environment: This growth was achieved despite challenging business environment in media & telecom industry.
3. Healthcare & Lifesciences
- Decline: healthcare & lifesciences business saw decline of 4.3% quarter-on-quarter in constant currency.
- Reason: decline was largely due to delays in renewals of some projects with large customer.
4. System Integration Services
- Growth: This segment recorded robust growth of 8.7% quarter-on-quarter in constant currency.
Overview
Market Reaction
- Share Performance: Following results, Tata Elxsi share price ended at ₹ 7,118.80, up 1.43% on July 10. However, shares fell over 2% in early trade on July 11.
Brokerage Opinions
- Kotak Institutional Equities: Retained Sell call, increasing target price to ₹ 5,500, indicating downside of 22%.
- JPMorgan: Retained Underweight call with price target of ₹ 5,800, implying 18.5% downside. JPMorgan noted positive surprises in transportation sector but anticipated headwinds in healthcare business, leading to cut in earnings estimates by 2-4% over FY25-27 due to higher tax rates.
Tata Elxsi CEO's Commentary
Manoj Raghavan, CEO & Managing Director, highlighted company's operational excellence & fiscal discipline, despite facing exceptional one-off expenses & increased effective tax rates due to changes in SEZ benefits. He expressed confidence in capturing growth opportunities in coming quarters, supported by healthy deal pipeline & continued strength in transportation business.
Tata Elxsi Financials
Metric | Q1 FY25 | Q1 FY24 | QoQ Change | YoY Change |
Revenue from Operations | ₹926 crore | ₹850 crore | 2% | 9% |
Net Profit | ₹184 crore | ₹189 crore | -6% | -3% |
Total Expenses | ₹706 crore | ₹624 crore | 13% | 13% |
EBITDA | ₹252 crore | ₹252 crore | -3% | Flat |
EBITDA Margin | 27.20% | N/A | -162 bps | N/A |
Transportation Growth | N/A | N/A | 5% (QoQ CC) | 20% (YoY CC) |
Media & Comm. Growth | N/A | N/A | 0.5% (QoQ CC) | N/A |
Healthcare Decline | N/A | N/A | -4.3% (QoQ CC) | N/A |
System Integration Growth | N/A | N/A | 8.7% (QoQ CC) | N/A |
Conclusion
Tata Elxsi's Q1 FY25 results reflect balanced performance with significant growth in key segments like transportation, despite challenges in healthcare & lifesciences sectors. company's strategic focus on operational efficiency & disciplined cost management positions it well for future growth, though market reactions & brokerage analyses suggest cautious optimism with anticipated challenges ahead.
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