KR Choksey is bullish on Tata Elxsi has recommended buy rating on the stock with a target price of Rs 1008 in its research report dated July 19, 2019.
KR Choksey's research report on Tata Elxsi
Tata Elxsi Q1FY20 results were below our estimates on both the revenue and profitability front due to degrowth in Auto vertical. Tata Elxsi reported revenue degrowth of 5.3% YoY (down 10.7% QoQ) to INR 3,617 mn against our estimates of INR 4,202mn. Overall, EBITDA margin contracted by 857 bps YoY to 19.3% (down 500 bps QoQ) indicating significant margin pressures. On a segmental basis, Software Development & Services (SDS) revenue declined by 4.7% YoY to INR 3,519.2 mn, while the segmental PBT for SDS declined by 32% YoY to INR 783.7mn. Net Profit declined by 30.8% YoY to INR 488 mn (down 31.6% QoQ) with NPM of 13.5% (down 496 bps YoY).
Outlook
Tata Elxsi is currently trading at a P/E multiple of 18.4x/13.9x on FY20E/FY21E earnings. We apply a P/E multiple of 19.2x to the FY21 estimated EPS of INR 52.5 to arrive at a target price of INR 1,008 per share, an upside of 38% over the CMP. Accordingly, we reiterate our “BUY” rating to the stock.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Read More
