Tata elxsi

Q3FY24 | Concall Notes

1. Growth:

Overall:

The commentary suggested by management indicates strong pipeline and good conversations going on.

EPD Division

• Transportation:
  • Solid pipeline and prospects going forward, some deals expected to ramp up in Q4 and Q1 FY25. Business mainly coming in from Europe, Japan and rest of the world
  • Focusing on business in Europe, Japan and ROW, both OEMs and Tier 1
  • Being selective about OEM business in North America. Working only with those OEMs that offer good terms and commercials
  • Some Tier 1 business going away as there in consolidation taking place in their business, some OEMs have started taking on the work that tier 1 companies did earlier and lastly because tier 1 companies are setting up captive centers in India
• Medical: Business has picked up since they’ve diversified from MDR business. Pipeline looks good for the next 2 quarters, beyond that they have limited visibility and aren’t sure if the growth witnessed recently is secular in nature, they are monitoring the same
• Media and communications: Prospects of this business remain highly uncertain. No green shoots visible now. This part of the business remains under stress. The management is working on retaining as much business as possible here. Recovery is no where in sight

2. Margins: Expect it to remain in the same range (27-29% types). No scope of further margin expansion

3. Hiring: Will go slow going forward. Have enough bench strength to cover existing and expected ramp up in business

4. General inference from the con-call: The next quarter or two the company is poised to do well due to the transportation and medical vertical.

Transportation vertical seems to be doing well overall. Medical vertical visibility needs to be tracked beyond 2 quarters. No visibility in sight for the media & comms vertical and the pressure is expected to persist heading into FY2025.

Disc: Invested