[Best stock for long term] Tata Elxsi Q3 net profit sharply up 39.5%

Tata Elxsi reported 12.67% growth in Dec-20 quarter top line revenues yoy at Rs477.10cr. The robust growth in top-line was largely led by design-led technology services, the core business competence of Tata Elxsi.

For the Dec-20 quarter, the operating profits were sharply up 59.75% at Rs132.56cr. This was on the back of a sharp fall in other expenses, which more than compensated for the higher manpower costs in the quarter. As a result, the operating margin or OPM expanded marginally sharply from 19.60% in the Dec-19 quarter to 27.78% in Dec-20 quarter.

Profit after tax (PAT) for the Dec-20 quarter was up 39.5% at Rs105.20cr on the back of higher top line revenues. This resulted in the PAT margins for the Dec-20 quarter expanding from 17.81% in Dec-19 quarter to 22.05% in the Dec-20 quarter.

Financial highlights for Dec-20 compared yoy and sequentially

Tata Elxsi
Rs in Crore Dec-20 Dec-19 YOY Sep-20 QOQ
Total Income (Rs cr) ₹ 477.10 ₹ 423.44 12.67% ₹ 430.18 10.91%
Operating Profit (Rs cr) ₹ 132.56 ₹ 82.98 59.75% ₹ 106.84 24.07%
Net Profit (Rs cr) ₹ 105.20 ₹ 75.42 39.49% ₹ 78.88 33.37%
Diluted EPS (Rs) ₹ 16.89 ₹ 12.11 ₹ 12.67
OPM 27.78% 19.60% 24.84%
Net Margins 22.05% 17.81% 18.34%

Key takeaways from the Dec-20 quarter results

  • The PAT of Rs.105.20 crore achieved in the Dec-20 quarter was the highest ever quarterly profit achieved by Tata Elxsi. During the quarter, Tata Elxsi saw extremely low attrition rates of 6.1%, extremely attractive for an IT company.

  • In terms of product design, the embedded product design business grew by 14.5% on a yoy basis while the industrial design and visualization business grew by 7.1% yoy. Both the business lines also saw positive growth on sequential basis.

  • In terms of the industry segments that generated demand for Tata Elxsi, transportation, media and communication saw sequential growth of 8% while healthcare saw 24% sequential growth in demand.