Tata Elxsi - ZENMoney

Company Profile: Tata Elxsi (incorporated in 1989) is a product engineering company of the Tata Group. The Company operates in two segments, namely Software Development & Services, and Systems Integration & Support. The businesses constituting Software Development & Services segment are embedded product design services, innovation design engineering and visual computing labs division. Through it's businesses, the company offers customized design solutions to companies across the industries like Communication, Defense, Healthcare, Media & Entertainment, Consumer Electronics, Telecom, Semiconductors and Transportation. The company serves it's global clients through it's offices in US, Europe, Middle East and Southeast Asia.

Strengths:

- The company is one of it's kinds operating in niche businesses and benefits from it's global presence and diverse clientele.

- Strong demand in it's visual computing segment will continue to drive business on the back of growing demand in animation and gaming.

Concerns:

- The demand for some of it's services may decline in short term due to slowdown being witnessed in the mainstream industries.

- As the company drives majority of it's revenues from exports, the forex fluctuations and hedging strategies is a matter of concern.

Outlook: The company expects EBIDTA margins to improve in FY'14 and is looking at opportunities in the Long Term Evolution (LTE) 4G wireless broadband technology to accelerate it's growth in the next couple of years. The company also expects improvement in the Healthcare verticals going forward. The company is uniquely positioned in product technology services and it's presence in diverse industries cushions the demand and provides sustained revenues. The defensive nature of the IT industry and the depreciating rupee would improve it's margins in the near term.

Source : Equity Bulls

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