India's Tata Elxsi beats Q2 profit estimates driven by transportation segment

L&T Technology Services

10/10/2024 14:00

Oct 10 (Reuters) - Indian engineering and technology services firm Tata Elxsi  TTEX.NS  reported a 14.7%
rise in its second-quarter profit on Thursday, exceeding street expectations, fuelled by healthy demand in its
transportation wing.
    The company's net profit rose to 2.29 billion rupees ($27.28 million) year-on-year for the quarter ended Sept.
30. Analysts had expected 2.05 billion rupees, according to data from LSEG. 
    Revenue from operations rose 8.3% to 9.55 billion rupees, in line with analysts' estimate of 9.56 billion
rupees.
    Revenue from the company's transportation unit grew 16% year-on-year on the back of deals signed in the quarter,
including a $50 million multi-year contract with a European company. The division accounts for about 55.7% of
revenue in the company's software development and services segment, which in turn contributes more than 97% to total
revenue.  
    Shares of the company closed 1.9% higher ahead of results on Thursday.    

    KEY CONTEXT 
    Engineering, research and design (ER&D) services, which include technology support to industries such as
automotive and communications, contribute a sixth of the revenue to India's $254 billion technology sector.
    Companies such as Tata Elxsi and peer L&T Technology Services  LTEH.NS  are expected to benefit from the ER&D
sector quadrupling to as much as $170 billion between 2023 and 2030, India's National Association of Software and
Service Companies has said. 
    L&T Technology Services will report results on Oct. 16.
    
    PEER COMPARISON    
                               Valuation (next    Estimates (next 12   Analysts' sentiment
                                 12 months)            months)         
                    RIC      PE      EV/EBITDA   Revenue    Profit     Mean     # of      Stock to price  Div yield
                                                 growth(%)  growth(%)  rating*  analysts  target**        (%)
 Tata Elxsi         TTEX.NS   52.81       37.41    13.26      12.85    Sell           12       1.15             0.90
 L&T Technology     LTEH.NS   38.56       25.02    10.94      10.88    Sell           26       1.13             0.94
 Services                                                                                                 
 KPIT Technologies  KPIE.NS   52.13       31.88    20.58      28.68    Buy            14       0.87             0.40
 Tata Technologies  TATE.NS   54.75       38.32    12.00      15.23    Hold            9       1.14             0.77
    
 * Mean of analysts' ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
 ** Ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the stock is trading above
the PT
    
    JULY-SEPTEMBER STOCK PERFORMANCE  
 
    -- All data from LSEG
    --($1 = 83.9470 Indian rupees)

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Tata Elxsi    https://tmsnrt.rs/3XPlWRh
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 (Reporting by Aleef Jahan; Editing by Abinaya Vijayaraghavan and Janane Venkatraman)
 ((aleefjahan.cs@thomsonreuters.com))