Sharekhan's research report on Tata Elxsi
TEL is well placed to capture increasing R&D spends in automotive (one of the largest spenders on R&D), broadcasting and communication (smart, connected homes, and OTT), and medical devices (remote healthcare). Given improving demand environment, ramp-up of recent deal wins, and healthy deal pipeline, TEL is expected to deliver revenue growth in the top quartile of industry-level growth in the coming years. TEL has successfully reduced its revenue concentration by increasing revenue contribution from non-automotive verticals and adjacencies. With investments on sales and marketing, delivery, and capabilities, the company has sharpened its focus on large multi-year deals against project-based engagements earlier.
Outlook
We stick to our Buy rating on Tata Elxsi Limited (TEL) with a revised PT of Rs. 3,100, given industry tailwinds, strong growth potential, and superior margin profile.
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