Tata Elxsi, Q4FY24: Concall notes
Growth:
FY25 growth: Management hasn’t given any implicit numbers, however they’ve provided the following directional guidance
- Transportation business: Aiming to repeat the growth performance from FY24 in FY25. Some deals expected to ramp up starting Q1 FY25 and will continue to ramp up beyond that.
- Media and communication business: Management believes that the segment has bottomed out and they see growth coming back into the vertical starting Q1FY25 or Q2FY25. The pipeline is building up and they are bullish that they will see a recovery soon.
- Note from FY24: The decline in revenue in this segment (topline impacted by 3%) was from the media operator segment (a single customer). The ramp down is done and it won’t impact the business and its growth going forward.
- Healthcare business: Mgmt is hoping to accelerate the growth of the healthcare business in FY25 as the challenges faced earlier (with the MDR business) are a thing of the past.
- Overall, they are expecting to put up a better performance in FY25 viz a viz FY24. The management expects the change will be visible from Q1 itself and that momentum will carry through the entire financial year.
Margins: Aiming to see if they can get back to the levels seen in FY23 (~30-31%)
Hirings: 1500-2000 fresh hires expected in the coming year. The hiring will be dependent on how the business is ramping up.
Accounting: Going forward, IDV revenues will be merged with the EPD segment (three verticals) revenues. This is being done as they’ve been winning deals because of their design capabilities and it is getting hard to differentiate the contribution from IDV within such deals (due to the bundled nature of the deals).
In summary, I think the management is heading in the direction they have alluded to in the last concall. The transportation and medical business grew. Media and communication struggled. Considering the overall macro environment, the management has a decent job in the FY gone by.
They sounded confident about the opportunities and seemed bullish about better growth prospects in FY25. I personally continue to remain bullish about the business for FY25 (and beyond).
Disc: Invested. Largest holding in my stock pf.
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