QoQ Profit and margins down, as usual Twitter community and Whatsapp/Telegram community will come under mixed reaction, and it is expected Stock will be under negative sentiment. But if we do some analysis on numbers, then things will be much clear.
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Higher management decided to recruit aggressively in this quarter. It happens when they see strong project pipelines. Management also commented “this has been a quarter of investing strongly in growth for the future.”
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Attrition rate declined for the second consecutive quarter. While other IT companies reporting on an average 25%-30% attrition, Tata Elxsi reporting only 18.7%, which is quite extraordinary.
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Employee cost jumped 7% QoQ and Other Expense jumped 25%, Affecting margins and profitability. After post covid Go to office work environment all IT companies are arranging project parties and team outing events, so this is acceptable.
They are making significant investments in growing their leadership pipeline for delivery, technology and sales, also opening new work facilities. So it is clear they are focused on their long journey. Let us wait for management commentary in concall. Things will be more clear there.
Stock is now 21% down from 52Wk high level. 200 day EMA is around 7853 . Personally I wish it will correct under negative sentiment and comes under 7500 level, that would be 30% down from 52WK high level. 7200 to 7500 level may create a demand zone for long term investors.
Disc : Invested from mid 2018 level, continuously averaging up based on certain indicators.
Edit : Above analysis/observation is entirely my own biased view. This is not a Buy or Sell call. Please do your own investigation before taking any decision.
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