Sharekhan's research report on Tata Elxsi
Tata Elxsi Ltd (TEL), in its annual report, highlighted its differentiated capabilities in design-led engineering and strong delivery capability that help it drive the customers’ transformation agendas in its focused verticals. TEL’s investments in platforms have increased its ability to scale efficiencies. Besides providing services, TEL eyes enterprises who want to outsource platforms on subscriber-based business model. Given its strong digital engineering capabilities, TEL would benefit from the current upcycle in ERD spends. TEL is expected to deliver industry-leading margin in FY2023, led by a higher offshore mix, and currency tailwinds.
Outlook
We retain a Buy on Tata Elxsi with a revised PT of Rs. 9,750, given its strong growth potential, robust deal wins and consistent dividend payouts. USD revenue and PAT are likely to clock a CAGR of 23% and 20%, respectively, over FY22-24E.
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