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TATA ELXSI INVESTMENT CALL


Posted on 2019-08-04 in WEALTH NOTE RESEARCH

 

 


Tata Elxsi was incorporated in 1989; provides system integration and software development. The company caters to various industries such as aerospace, consumer electronics, entertainment.

 

It provides hardcore technology and strength in design. The company offers an end-to-end solution across the product lifecycle. Product Design Services- The Company is engaged in product research and development outsourcing business since 1989.

Industrial Design Division- Being the largest design house in India, designs products that support the creation of the brand. According to client requirement, it conceptualizes products.

 

Visual Computing Labs- The Company develops 3D and 2D animation, visual effects and gaming services. This division offers services in Pre-production, Production, Animation, post-production for advertising, films, TV, and Gaming.

System Integration Services- It caters to enterprise and high- performance computing market with a wide range of hardware, networking products and storage solution.

 

IPs contributed 5% of TECX’s 9MFY18 revenues, which realigns with TELX’s strategy to focus on building a portfolio of IPs that would enable an even higher contribution over the next few years. Although the mainstay of revenues is expected to be service-driven, a portfolio of IPs would help TELX to expand its clientele, and thus, reduce dependency on selected few accounts.

 

We continue to remain positive on the stock has given its presence in high growth markets and proven technical capabilities. Broadcast & consumer electronics (35% of EPD) is engaged with semiconductor vendors, set-top box companies and Channels & Broadcasters providing over the top content, helping them reduce engineering costs associated with development. Management expects Broadcast to grow steadily led by an escalation of new technologies. Under Industrial Design(ID), TATELX worked for Mumbai Monorail and Airport related to signage design systems and is currently engaged for four railway stations for similar engagement and expects as a big opportunity going ahead for several other railway stations too. The company has no debt on its balance sheet and is efficiently managing its working capital requirements. With the change in the business mix, the company is able to generate better margins and higher ratios.

 

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