30 July 2015
1QFY16 Results Update | Sector:
Technology
Tata Elxsi
BSE SENSEX
27,705
Bloomberg
Equity Shares (m)
M.Cap. (INR b) / (USD
b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val (INRm)/Vol
‘000
Free float (%)
S&P CNX
8,422
TELX IN
31.1
53.9/0.9
1758 / 551
46/130/180
801/808
55.1
CMP: INR1,731
TP: INR1,900 (+11%)
Buy
Exciting opportunities; re-rating to continue
1QFY16 results – beat on all counts; raising FY16/17 estimates
We attended Tata Elxsi’s (TELX) investor meet in Bangalore, where the top
management led by Mr Madhukar Dev, CEO, Mr Nitin Pai, Head – Marketing, and Mr
Manoj Raghavan, Head – EPD made a presentation followed by a tour of the facilities
and solutions. We have returned enthused about the strong capabilities TELX has built
over the last 25 years in the areas of technology, engineering and design. What’s most
exciting are the opportunities available to TELX not just in key verticals like
Automotive and Broadcast, but also due to the changing global landscape with the
advent of Internet of Things (IoT). Maintain
Buy
with a TP of INR1,900 (30x FY17 EPS).
1QFY16 results – Beat on all counts:
Tata Elxsi reported 1QFY16 numbers with a top-
line of INR2,435m (est. INR2,136m) as compared to INR1,908m in 1QFY15, a YoY
growth of 27.7%. Growth was led by embedded product development (EPD) division
which grew 27% YoY and contributed 80% to total revenues. Similarly, industrial
design (ID) posted strong 50% growth in 1QFY16 and contributed 12% to revenues.
Visual Computing Labs (VCL) business which now contributes a miniscule 1% of total
revenues continued to decline this quarter with a growth of -57%. Systems integration
grew 33% and contributed 8% to revenues. EBITDA grew YoY 49% and stood at
INR560m (est INR377m), EBITDA margins stood at 23% in 1QFY16 (est 19.7%) as
compared to 19.8% in 1QFY15, an expansion of 320bp YoY. Consequently, PAT grew
72% YoY and stood at INR357m (est.INR242m).
Automotive, broadcast and industrial design - key growth drivers:
Automotive,
broadcast and industrial design are key growth segments expected to drive ~25%
consolidated growth on an annual basis. With OEMs having launches planned for the
next 5 years, management highlighted that growth visibility is strong in the
automotive division. Key lever driving growth is the speed with which electronics are
getting absorbed; with rising proportion of electronics in a car being a secular trend.
Similarly, traditional broadcast model is facing disruption with the internet – Over the
Top (OTT) content bypassing traditional service providers. With the new model,
channels and broadcasters have the ability to reach directly to consumers bypassing
the traditional cable pipe. TELX is working across the ecosystem level with leading set
top box vendors, with service providers, studios and channels in this new era for
broadcast which is driving growth in this segment. On the back of strong demand for
TELX’s design skills in product and service design, ID division is winning new business
(recently won an order for branding and entire design of Kochi metro), thus providing
strong growth visibility for this division.
Valuation and view: Expect re-rating to continue:
Led by automotive, broadcast and
industrial design divisions, we expect TELX to post 25% revenue CAGR and 40% PAT
CAGR over FY15-17. We upgrade our EPS estimates by 15% and 24% to reflect strong
earnings beat and improved growth outlook. With strong set of capabilities built over
last 25 years in areas of technology, engineering and design and being a strong play
on IoT, we maintain ‘Buy’, PT INR1,900 (30x FY17).
Financials & Valuation (INR Billion)
Y/E Mar
Sales
EBITDA
PAT
EPS (INR)
EPS Gr. (%)
2015 2016E 2017E
8.5
1.8
1.0
32.8
41.1
10.5
2.4
1.5
47.1
43.9
13.2
3.2
2.0
63.8
35.3
145.6
49.1
74.4
27.1
11.9
BV/Sh. (INR) 91.0 114.2
RoE (%)
39.3 45.9
RoCE (%)
59.8 69.6
P/E (x)
P/BV (x)
52.8
19.0
36.7
15.2
Estimate change
TP change
Rating change
+24%
+46%
Atul Mehra
(Atul.Mehra@MotilalOswal.com); +91 22 3982 5417
Niket Shah
(Niket.Shah@MotilalOswal.com); +91 22 3982 5426
Investors are advised to refer through disclosures made at the end of the Research Report.
Motilal Oswal research is available on
www.motilaloswal.com/Institutional-Equities,
Bloomberg, Thomson Reuters, Factset and S&P Capital.

Tata Elxsi
1QFY16 results – Beat on all counts
n
n
n
Tata Elxsi reported 1QFY16 numbers with a top-line of INR2,435m (est.
INR2,136m) as compared to INR1,908m in 1QFY15, a YoY growth of 27.7%.
EBITDA grew YoY 49% and stood at INR560m (est INR377m), EBITDA margins
stood at 23% in 1QFY16 (est 19.7%) as compared to 19.8% in 1QFY15 an
expansion of 320bp YoY.
Exchange gain stood at INR36m during the quarter which has been included in
other income of INR72m, driving PAT higher. Consequently, PAT for 1QFY16
grew 72% YoY and stood at INR357m (est.INR242m) vs INR208m in 1QFY15.
Exhibit 1: Revenue growth at 28%
Revenue from Operations
28%
29%
Growth (YoY)
28%
10%
1,732
1,900
2,001
2,115
1,908
11%
2,215
18%
22%
8%
2,059
9%
2,313
2,435
Source: Company, MOSL
Exhibit 2: EBITDA growth robust at 50% YoY
EBITDA (INR m)
22%
17%
8%
135
324
436
470
377
418
504
474
560
22%
20%
EBITDA Margins (%)
20%
23%
20%
23%
Exhibit 3: PAT growth at 72%
PAT
PAT Margins (%)
13%
13%
15%
10%
5%
89
199
11%
10%
11%
11%
216
218
208
236
278
298
357
Source: Company, MOSL
Source: Company, MOSL
30 July 2015
2

Tata Elxsi
Software development and system integration both report robust growth
n
n
n
n
Software division revenues grew by 27% YoY to INR2,251m, while systems
integration (SI) revenues posted a growth of 33% YoY to INR184m.
Software division contributed 92% to revenues, SI contributed 8%.
Segment EBIT margins for software development expanded 500 bps to 25% YoY
while margins for SI expanded 1100bp YoY to 14% (QoQ expansion of 400 bp).
EBIT margins expanded 600bp YoY to 22% from 16% in 1QFY15.
Exhibit 5: Systems Integration revenues decline 35% YoY
System Integration
13%
16%
-4%
-35%
2,139
2,251
-55% 139
169
194
174
184
27%
Growth (YoY)
33%
Exhibit 4: Software business posts 16% growth
Software Development
Growth (YoY)
24%
10%
1,769
1,890
10%
2,021
Source: Company, MOSL
Source: Company, MOSL
Exhibit 6: Software EBIT margins expand 400bp YoY
Software Development
21%
13%
182
362
408
428
352
403
478
534
570
22%
23%
20%
21%
EBIT Margins (%)
24%
25%
25%
Exhibit 7: Systems Integration margins expand 1100bp YoY
System Integration
10%
8%
25
17
17
10%
9%
3%
4
EBIT Margins (%)
14%
11%
11%
8%
25
19
16
20
25
Source: Company, MOSL
Source: Company, MOSL
Exhibit 8: Software business contributed 92% to revenues
System
Integration, 8
%
Exhibit 9: Software business contributed 96% to EBIT
System
Integration, 4
%
Software
Development
, 92%
Software
Development
, 96%
Source: Company, MOSL
Source: Company, MOSL
30 July 2015
3

Tata Elxsi
Embedded product development posts strong growth at 27%
n
n
n
n
Within software division, growth was led by embedded product development
(EPD) division which grew 27% YoY and contributed 80% to total revenues.
EPD division’s growth recovered after three quarters of sluggish growth
(averaging 9%), which we believe was due to ramp down in business of a large
broadcast client. Going forward with favorable base, and strong order outlook,
we believe EPD will post 26% growth for FY16.
Similarly, industrial design (ID) posted strong 50% growth in 1QFY16 which we
expect to continue for FY16 with a revenue contribution of 12%.
Visual Computing Labs (VCL) business which now contributes a miniscule 1% of
total revenues continued to decline this quarter with a growth of -57%. We
expect weak performance for the division to continue at -50% growth for FY16.
Exhibit 10: Segment wise performance
Segment revenues (INR m)
Embedded Product Design
Industrial Design
VCL
Systems Integration
Total
Segment revenue growth (%)
Embedded Product Design
Industrial Design
VCL
Systems Integration
Total
Segment revenue mix (%)
Embedded Product Design
Industrial Design
VCL
Systems Integration
Total
1QFY14
1,225
147
52
308
1,732
2QFY14
1,502
167
54
176
1,899
3QFY14
1,603
184
43
171
2,001
4QFY14
1,619
195
35
266
2,115
1QFY15
1,531
187
51
139
1,908
2QFY15
1,616
230
44
169
2,059
3QFY15
1,702
276
42
194
2,214
4QFY15
1,830
279
30
174
2,313
1QFY16
1,948
280
22
185
2,435
8
18
9
136
21
29
19
-10
16
25
35
7
-8
54
32
30
13
5
115
34
25
27
-3
-55
10
8
38
-20
-4
8
6
50
-2
13
11
13
43
-14
-35
9
27
50
-57
33
28
71
8
3
18
100
79
9
3
9
100
80
9
2
9
100
77
9
2
13
100
80
10
3
7
100
79
11
2
8
100
77
79
80
12
12
12
2
1
1
9
8
8
100
100
100
Source: Company, MOSL
30 July 2015
4

Tata Elxsi
Key highlights from investor meet
TELX – focused on three elements – Technology, Engineering and Design
Management highlighted three core areas TELX is focused on as a company:-
n
Technology
– this involves helping build devices for OEMs in areas of hardware,
operating systems, middleware, etc.
n
Engineering
– this involves building applications in areas of embedded software,
cloud solutions and applications.
n
Design
– this involves working on user experience / user interface.
TELX – Auto, Broadcast, Communication, Healthcare key focus industries
Management highlighted four core industries TELX is focused on as a company:-
n
Broadcast and consumer electronics
n
Communications
n
Automotive
n
Healthcare
Exhibit 11: TELX in a nutshell
Technology | Engineering | Design
User Experience
Applications
Devices
User Interaction, Service Design, Rich Content
Software - Embedded, Cloud, Mobile
Hardware, OS, Middleware, System design
Key Vertical Markets
Broadcast & CE
Communications
Automotive &
Industrial
Healthcare
Source: Company, MOSL
30 July 2015
5

Tata Elxsi
Automotive – Capitalizing on rising absorption of electronics in cars
n
n
n
15+ Years of Automotive Centre of Excellence (CoE).
Working with 8 OEMs, 25 Suppliers across the world in areas like infotainment,
safety, power train, body and chassis electronics.
Key certifications like Auto SPICE Level 5 which is the highest level of maturity
that a company can reach in automotive software.
Exhibit 12: Key areas in automotive
Source: Company, MOSL
Broadcast and Consumer electronics – riding on new industry structure
n
n
n
Traditional broadcast model facing disruption with internet (Over the Top (OTT)
content) bypassing traditional service providers.
With the new model, channels and broadcasters have the ability to reach
directly to consumers bypassing the traditional cable pipe.
TELX is working across the ecosystem level with leading set top box vendors,
with service providers, studios and channels in this new era for broadcast.
Exhibit 13: Key areas in broadcast
Source: Company, MOSL
30 July 2015
6

Tata Elxsi
Communications – working on new age solutions for the cloud
n
n
Traditionally, TELX worked in unified communications areas involving video
conferencing, audio conferencing, tele presence, etc.
TELX is now working on new age solutions like migration of physical products
either partly into the Cloud or fully into the Cloud.
Exhibit 14: Key areas in communications
Source: Company, MOSL
Medical electronics – nascent segment, with high growth potential
n
n
Recent foray where TELX works in the healthcare devices market (therapeutic
devices, diagnostic devices, patient monitoring devices.
Working on journey with customers from mechanical, electromechanical to fully
electronic, from unconnected devices to fully connected devices.
Exhibit 15: Key areas in medical electronics
Source: Company, MOSL
30 July 2015
7

Tata Elxsi
Semiconductor and System design – identifying new technologies early
n
n
n
TELX works in areas like chip design, validation, supporting customers after the
chip comes back from the fabrication and the foundry plants.
Management looks at this segment as a horizontal as involves working with
small start-ups, some of them very innovative start-ups sitting from the bay area
building new technologies like Internet of Things (IoT), Sensors, etc.
This segment enables TELX to align itself with new technologies early in their
lifecycle which helps TELX implement new solutions in key industries it serves
like automotive, broadcast and consumer electronics, communications, medical.
Exhibit 16: Key areas in semiconductor and system design
Source: Company, MOSL
Industrial Design – niche segment catering to product / experience design
n
In the industrial design division, TELX works with sectors like FMCG, Automotive
for product design and is also working on service design (metro/monorail/etc).
Exhibit 17: Key areas in industrial design
Source: Company, MOSL
30 July 2015
8

Tata Elxsi
Visual Computing Labs – not a major focus area
n
VCL creates rich multimedia content for the entertainment industry (Hollywood,
Bollywood or TVs).
Exhibit 18: Key areas in VCL business
Source: Company, MOSL
Systems Integration – focusing on professional services segment
n
n
Systems Integration division resells and integrates equipment, software and
solutions for manufacturing, government and defense customers in India.
Professional services division provides administration as well as IT management
services independent of whether TELX resells equipment or not.
Exhibit 19: Key areas in System Integration business
Source: Company, MOSL
30 July 2015
9

Tata Elxsi
Convergence – a mega theme that will benefit TELX
n
n
n
Management highlights that we are entering a period of massive convergence –
of consumers, of markets, and of technologies.
For example, in case of broadcast, traditional classical service providers like
Comcast, Time Warner, Liberty never thought of a Google or an Apple or an
Amazon as their competition, which is now a reality. The entire broadcast model
is now undergoing sea change due to an intersection of new players from the
internet software world into the broadcast world.
With strong capabilities built over last 25 years, and significant consumer and
market insights across different user industries and technologies, management
believes TELX is best placed to capture growth in a converging world.
Exhibit 20: Key areas in System Integration business
Source: Company, MOSL
Convergence – example of a live project executed by TELX
n
n
n
n
n
n
n
n
TELX worked with a company which was in the business of providing a pendent
with a button for emergency assistance, meant for people living alone.
Anytime they have a medical emergency they can call for emergency assistance
through the pendent.
You press the button, it's a hotline, it dials directly into 24/7 medical care
centre, they decide whether they need to send an ambulance, they need to
send a relative, what they need to do next.
It was simple service like that doing very well but what TELX helped build was
something transformational in nature.
TELX brought in a whole set of sensors into the home expanding the scope from
just a person’s medical wellbeing to being overall safe while living alone.
This involved setting up a mechanism to connect all the diagnostic devices right
from blood pressure, glucose meter, temperature reader and so on.
Additionally, TELX built in sensors to take care whether the person living alone
had forgotten something, whether have they left the gas on, whether they left
the tap on in the bathtub, have they forgot to turn off something.
So, as one finds what started off as a healthcare service provider is now what
would be a smart home provider, a security provider, a connectivity provider, so
it's a convergence creating an entire ecosystem supporting people living alone.
10
30 July 2015

Tata Elxsi
Convergence of consumers, markets and technologies to be disruptive
changes, TELX well placed to capitalize
n
n
n
n
Management believes convergence of consumers, markets and technologies is
the biggest disruptive change which will impact multiple traditional industries.
For instance, such intersections are causing disruptions in the broadcast industry
involving new competition from technology giants like Google/Apple/Amazon
(with their own operating systems) which is posing a threat to traditional players
like Comcast, Time Warner, Liberty.
We expect convergence of technologies to open up opportunities for TELX to
integrate new solutions for Multi System Operators (MSO) with its capabilities
across spectrums like Broadcast, Consumer Electronics, IoT, etc.
An example of convergence positively impacting TELX is the introduction of
Reference Design Kit (RDK) – open source software freely licensed by RDK
Management LLC, a joint venture between Comcast Cable, Time Warner Cable,
and Liberty Global. Management highlights, practically speaking, RDK is a
creation of the world’s leading MSOs as an alternative to Android for the cable
industry. TELX’s role is to integrate RDK with MSO systems, along with
customizations for the specific MSO client.
Management also highlighted that Cloud, IoT are new disruptive technologies
and TELX is investing into these technologies, to benefit from them.
Automotive, industrial design and broadcast key growth drivers
n
n
n
Automotive, broadcast and industrial design are key growth segments expected
to grow at ~25% on an annual basis. However, management highlighted that
given project nature of business, quarterly volatility can be expected.
With OEMs having launches planned for the next 5 years, management
highlighted that growth visibility is strong in the automotive division.
Key lever driving growth is the speed with which electronics are getting
absorbed; rising proportion of electronics is a secular trend.
Market size of individual segments, client concentration and JLR
n
n
n
n
As per management estimates, project engineering market size specifically
addressable by TELX is ~500m USD for broadcast, ~600m USD for automotive
and ~200m USD in telecom, where TELX does only select work.
Top 5 clients account for 55% of total revenues. JLR is the largest client for TELX
contributing 20% to total revenues and approximately 35% to automotive
division’s revenues. However, ex-JLR business from Tata Group is ~3% of
revenues.
Management highlights JLR has witnessed significant uptick in new product
launch post acquisition by Tata Motors, hence with more work to be done,
quantum of work from JLR has increased significantly.
Project durations: Median project durations are ~6 months.
Talent and utilization rates
n
Given specialized nature of operations, TELX’s reliance on experienced
employees is higher than fresher’s. When freshers are hired, they undergo ~6
months of classroom training, overall takes a year before they are on the job.
11
30 July 2015

Tata Elxsi
n
Utilization rate currently stands at ~70%, which management expects can
improve 5% to 6%.
Europe and US are key markets; India – a promising market
n
n
n
North America and Europe are the key markets for TELX. Japan as a geography
has seen its contribution decline from 20% to 10% over FY08-15 for TELX.
Management highlighted that due to its presence in Japan being largely from
consumer electronics companies like (Sony/Panasonic), and these companies
losing market share in their key products, budgets from these companies have
been curtailed thus impacting growth for TELX as well.
However, management expects India to open up as an opportunity in next few
years which will prove to be a strong growth opportunity.
Key competition – largely regional in nature
n
n
n
In terms of competition,
TELX faces competition from East Europe countries for
Europe business, in US, large Indian counterparts like Infosys, Wipro, HCL are
competition in case of large deals.
Domain perspective
– KPIT is competition for automotive, while Sasken is
competition for broadcast. Management doesn’t believe captive units of OEMs
are competition.
TCS as competition:
Management highlighted that in specific domains of
automotive, broadcast, unified communications and medical, TCS does not
participate and hence doesn’t compete with TELX.
Contribution from Intellectual Property Rights
n
IPR and Patent related initiatives:
Management highlighted that IPRs currently
contribute negligibly to revenues. However, over the next 4 quarters, TELX is
looking to build its IPR portfolio which it can then start licensing at a later stage.
Inorganic growth unlikely in the near term
n
Inorganic growth:
Management suggested that over a longer term time frame
will be open to look at strategic acquisitions for market access or for filling gaps
in product portfolio. However, in the near term, they do not immediately find
any major product gaps, especially given TELX’s focused approach on select
segments like Automotive, Broadcast.
Larger size per engagements to aid further growth
n
As a trend, management is seeing TELX enter into larger engagements with
clients where size per engagement is increasing. Management highlighted
repeat business from existing clients is strong which provides testimony to
TELX’s quality of services.
Start-up incubation could provide long term monetization opportunities
n
Management highlighted that TELX is an accelerator to some of the technology
start-ups in Bangalore area. TELX gets an equity stake in lieu of providing
infrastructure, mentoring, etc to start ups. TELX does not invest any money in
these start ups. On an average of the 100 applications from startups that it gets
annually, TELX select 2-3.
12
30 July 2015

Tata Elxsi
Valuation and view
n
n
n
n
n
Higher offshoring in auto to drive multi-year growth:
With higher penetration
of automotive electronics – (software, which comprised 2% of total value of a
vehicle in 2000, now comprises 15% of the total value and expected to reach
20% by 2020), just 0.4% offshoring penetration and 40-50% cost savings -
offshoring to India can be a multi-year growth story. This, we believe can drive
30% CAGR in automotive revenues for TELX as against 42% revenue CAGR over
FY12-15.
Broadcast – another high growth segment:
Similar to automotive, we expect
30% revenue CAGR over in the broadcast division over FY15-17 as against 29%
revenue CAGR over FY12-15 segment led by investments by operators in
developing newer services and features. With automotive and broadcast
together accounting for ~65% of TELX’s revenues, we believe TELX can post 25%
revenue CAGR in medium term.
Medical electronics and Internet of Things (IoT) – could see significant
contribution going forward:
Medical segment is in incubation currently, and is
yet to achieve critical mass. However, given renewed interest in developing this
segment, we believe medical electronics could be the fourth core segment for
TELX in the software solutions business. TELX is targeting medical devices in
point of care and diagnostic segments. Similarly, TELX is working with customers
across industries (retail, energy, smart home, healthcare) for IoT developments
which hold hyper growth potential.
Best in class return rations, cash generation and dividend payout:
With a pure
service business model requiring minimal capital investments, TELX delivers
superior return ratios – 70% RoCE and 47% RoE for FY17E along with ~50%
dividend payout. We expect TELX to derive significant operating and free cash
flows from operations, which should total INR4b and INR3.6b, respectively over
FY15-17.
We value the stock at 30x FY17E EPS of INR63.8, arriving at target of INR1,900.
Exhibit 22: 1-year forward PB (x)
15 Yrs Avg(x)
10 Yrs Avg(x)
26.3
12.5
9.5
6.5
15.5
3.5
0.5
4.9
P/B (x)
5 Yrs Avg(x)
10 Yrs Avg(x) 11.1
Exhibit 21: 1-year forward PE (x)
43
P/E (x)
5 Yrs Avg(x)
23
17.0
3
Source: Company, MOSL
Source: Company, MOSL
30 July 2015
13

Tata Elxsi
Exhibit 23: A key assumptions
Segments
Software Development - (A+B+C)
Systems Integration- (D)
Total Revenues (INR m)
Software Development
Systems Integration
Total Revenue Growth (%)
Software Development
Systems Integration
Total Revenue Mix (%)
Software Development
Systems Integration
Total EBITDA (INR m)
Software Development
Systems Integration
Total EBITDA Margin (%)
Software Development
Systems Integration
Total EBITDA Mix (%)
FY12
4,543
845
5,387
27%
46%
30%
84%
16%
100%
598
84
740
13%
10%
14%
88%
12%
100%
FY13
5,530
687
6,217
22%
-19%
15%
89%
11%
100%
624
17
721
11%
2%
12%
97%
3%
100%
FY14
6,827
921
7,748
23%
34%
25%
88%
12%
100%
1,379
84
1,364
20%
9%
18%
94%
6%
100%
FY15
7,817
676
8,493
15%
-27%
10%
92%
8%
100%
1,829
54
1,765
23%
8%
21%
97%
3%
100%
FY16E
FY17E
9,816
12,430
710
745
10,526
13,175
26%
27%
5%
5%
24%
25%
93%
94%
7%
6%
100%
100%
2,454
3,232
71
75
2,354
3,103
25%
26%
10%
10%
22%
24%
97%
98%
3%
2%
100%
100%
Source: Company, MOSL
30 July 2015
14

Tata Elxsi
Story in charts: Massive opportunity
Exhibit 24: High revenue contribution from software business Exhibit 25: EBIT contribution from software business higher
Systems
Integration,
12%
Systems
Integration,
5%
Software
Developme
nt, 88%
Software
Developme
nt, 95%
Source: MOSL, Company
Source: MOSL, Company
Exhibit 26: Transport and Broadcast – Key growth drivers
Communica
tions, Other
s, 25%
Transportat
ion, 40%
Exhibit 27: Greater demand for electronics – A secular trend
Electronics cost as a propotion of car value (%)
30%
Broadcast
and
Consumer
Electronics,
35%
5%
2002
2014
Source: MOSL, Company
Source: MOSL, Company
Exhibit 28: Robust dividend payout
Dividend Payout (%)
85
Exhibit 29: Strong return ratios
RoCE (%)
70
60
47
74
45
40
51
51
22
FY13
FY14
FY15
FY16E
FY17E
FY13
FY14
FY15
FY16E
FY17E
Source: MOSL, Company
Source: MOSL, Company
30 July 2015
15

Tata Elxsi
Financials and valuations
Consolidated - Income Statement
Y/E March
Total Income from Operations
Change (%)
Total Expenditure
% of Sales
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income
PBT
Current Tax
Deferred Tax
Tax Rate (%)
Reported PAT
Adjusted PAT
Change (%)
Margin (%)
FY10
3,882
-7.4
3,219
82.9
663
17.1
166
497
0
10
506
15
3
3.6
488
488
-16.1
12.6
FY11
4,159
7.1
3,687
88.7
472
11.3
172
300
19
39
320
32
-37
-1.7
325
325
-33.4
7.8
FY12
5,387
29.5
4,647
86.3
740
13.7
205
535
23
42
554
144
22
30.1
346
346
6.4
6.4
FY13
6,217
15.4
5,496
88.4
721
11.6
237
483
39
48
334
102
8
32.9
213
320
-7.6
5.1
FY14
7,748
24.6
6,383
82.4
1,365
17.6
350
1,015
18
126
1,122
376
24
35.6
723
723
126.1
9.3
FY15
8,494
9.6
6,721
79.1
1,773
20.9
255
1,518
0
33
1,551
535
-4
34.2
1,020
1,020
41.1
12.0
FY16E
10,526
23.9
8,105
77.0
2,421
23.0
297
2,124
0
100
2,224
756
0
34.0
1,468
1,468
43.9
13.9
(INR Million)
FY17E
13,175
25.2
9,974
75.7
3,202
24.3
322
2,880
0
130
3,010
1,023
0
34.0
1,986
1,986
35.3
15.1
Consolidated - Balance Sheet
Y/E March
Equity Share Capital
Preference Capital
Total Reserves
Net Worth
Total Loans
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Curr. Assets, Loans&Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Provisions
Net Current Assets
Appl. of Funds
FY10
311
0
1,440
1,751
340
2,196
1,501
601
900
2,060
1
1,413
143
504
821
488
333
1,239
2,196
FY11
311
0
1,512
1,824
254
2,198
1,675
768
908
1,991
6
1,164
208
613
924
573
351
1,067
2,198
FY12
311
0
1,608
1,920
342
2,392
1,963
964
999
2,243
0
1,369
267
606
1,048
719
329
1,195
2,392
FY13
311
0
1,640
1,952
585
2,729
2,190
1,198
992
2,449
3
1,567
233
645
1,071
830
241
1,378
2,729
FY14
311
0
2,046
2,357
0
2,485
1,821
853
968
2,789
0
1,748
515
526
1,458
994
463
1,331
2,485
FY15
311
0
2,523
2,834
0
2,834
2,293
1,308
985
3,640
3
1,791
1,333
514
1,821
1,139
682
1,819
2,834
(INR Million)
FY16E
311
0
3,244
3,555
0
3,555
2,493
1,605
888
4,965
0
2,307
2,092
565
2,302
1,240
1,062
2,663
3,555
FY17E
311
0
4,222
4,533
0
4,533
2,693
1,927
766
6,690
0
2,888
3,180
622
2,927
1,552
1,375
3,763
4,533
30 July 2015
16

Tata Elxsi
Financials and valuations
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
Return Ratios (%)
RoE
RoCE
Working Capital Ratios
Debtor (Days)
Creditor (Days)
Working Cap. Turnover (Days)
Leverage Ratio (x)
Current Ratio
Debt/Equity
2.5
0.2
2.2
0.1
2.1
0.2
2.3
0.3
1.9
0.0
2.0
0.0
2.2
0.0
2.3
0.0
133
366
103
102
389
75
93
367
63
92
510
67
82
482
38
77
553
21
80
478
20
80
478
16
29.9
27.1
18.2
16.2
18.5
26.6
16.5
22.2
33.6
46.6
39.3
59.8
45.9
69.6
49.1
74.4
0.4
0.4
0.4
0.3
74.5
50.2
22.9
6.9
39.1
0.5
52.8
42.2
19.0
6.2
29.6
0.6
36.7
30.5
15.2
4.9
21.4
1.2
27.1
23.3
11.9
3.8
15.8
1.6
15.7
21.0
56.2
7.0
52.2
10.4
16.0
58.6
7.0
77.7
11.1
17.7
61.7
7.0
73.2
10.3
17.9
62.7
5.0
85.5
23.2
34.5
75.7
9.0
45.3
32.8
41.0
91.0
11.0
40.2
47.1
56.7
114.2
20.0
50.9
63.8
74.1
145.6
27.0
50.8
FY10
FY11
FY12
FY13
FY14
FY15
FY16E
FY17E
Consolidated - Cash Flow Statement
Y/E March
OP/(Loss) before Tax
Depreciation
Interest & Finance Charges
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
(inc)/dec in FA
Free Cash Flow
CF from Investments
(Inc)/Dec in Debt
Dividend Paid
CF from Fin. Activity
Inc/Dec of Cash
Opening Balance
Closing Balance
E: MOSL Estimates
30 July 2015
FY10
506
166
17
-36
-548
105
-86
52
-97
209
-217
-62
-21
163
143
FY11
320
172
16
-104
142
546
-290
419
-287
-85
-217
-357
65
143
208
FY12
554
205
23
-138
-86
558
-282
342
-332
44
-218
-232
59
208
267
FY13
334
237
23
-177
-89
328
3
382
-304
183
-218
-109
-34
267
233
FY14
1,122
350
16
-174
-99
1,215
1
1,289
-221
-585
-156
-786
282
233
515
FY15
1,551
255
-54
-392
74
1,434
-329
1,101
-290
0
-321
-321
818
515
1,333
(INR Million)
FY16E
2,224
297
0
-756
-84
1,681
-174
1,506
-174
0
-747
-747
760
1,333
2,092
FY17E
3,010
322
0
-1,023
-12
2,296
-200
2,096
-200
0
-1,008
-1,008
1,088
2,092
3,180
17

Tata Elxsi
Corporate profile: Tata Elxsi
Company description
Incorporated in 1989, Tata Elxsi (TELX) operates in
two core segments – software, which contributes
88% to revenues, and systems integration, which
contributes 12% to revenues. In the software
vertical, 77% of revenues are derived from
embedded product development (EPD), followed
by industrial design, which contributes 9% to
revenues, and the balance 2% is derived from
visual computing labs (VCL). Within EPD, TELX
caters to three core industries – automotive (40%
of EPD revenues), broadcast (35% of EPD revenues)
and communications (25% of EPD revenues). TELX
employs 4,200 people and derives approximately
equal revenues from US, Europe and Asia.
Exhibit 30: Sensex rebased
Exhibit 31: Shareholding pattern (%)
Jun-15
Promoter
DII
FII
Others
45.0
3.9
8.4
42.8
Mar-15
45.0
3.3
8.2
43.6
Jun-14
45.0
4.1
5.9
45.0
Exhibit 32: Top holders
Holder Name
LIC of India
% Holding
2.5
Note: FII Includes depository receipts
Exhibit 33: Top management
Name
N G Subramaniam
Madhukar Dev
Designation
Chairman
Managing Director & CEO
Exhibit 34: Directors
Name
N G Subramaniam
Madhukar Dev
P G Mankad*
P McGoldrick*
*Independent
Name
R Natarajan*
Shyamala Gopinath*
Gopichand Katragadda
Exhibit 35: Auditors
Name
Deloitte Haskins & Sells
Type
Statutory
Exhibit 36: MOSL forecast v/s consensus
EPS
(INR)
FY16
FY17
MOSL
forecast
47.1
63.8
Consensus
forecast
40.9
51.6
Variation
(%)
15.2
23.6
30 July 2015
18

Tata Elxsi
NOTES
30 July 2015
19

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TATA ELXSI LTD
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