Tata Elxsi Ltd - Consolidated Q3 FY2014 Results - First Cut - Microsec

Tata Elxsi Ltd (Tata Elxsi) reported its consolidated Q3 FY2014 results on 27 January 2014. Both the company's top line and bottom line came above Bloomberg Consensus Estimates.

While Tata Elxsi's top line increased 5.3% q-o-q to Rs. 200.1 Crores, its bottom line expanded sequentially 8.2% to Rs. 21.6 Crores in Q3 FY2014. Growth in the company's top line was driven by a strong performance by Software Development & Services business, where revenues rose 6.1% q-o-q to Rs. 183.0 Crores. Healthy performance from the business kept Tata Elxsi's performance upbeat despite a sequential decline in revenues from System Integration & Support Services stream. In addition to notable increase in revenues, significant decline in other expenses helped the company to post 34.3% jump in Earnings before Interest Depreciation Tax and Amortization (EBIDTA) to Rs. 43.6 Crores. Sturdy EBIDTA level show enabled Tata Elxsi to post a modest 8.2% q-o-q improvement in Net Profits despite Net Other Income remaining negative at Rs. 1.2 Crores, during the quarter, compared with positive Net Other Income of Rs. 6.5 Crores in Q2 FY2014.

Although Tata Elxsi reported a vigorous performance in Q3 FY2014, its valuations remain quite high. The stock at CMP of Rs. 378 is trading at FY2014E PE of 16.3x. However, considering its robust growth, reported in recent quarters, we suggest the investors to HOLD the stock at current juncture.

Source : Equity Bulls

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