🧂 At a Glance
Tata Elxsi used to be the cool nerd of the Tata family — designing futuristic dashboards for cars, building OTT platforms, and sprinkling AI across healthcare. In FY22, the stock did Formula 1 speed. But since then? It’s been…cruising. Margins have compressed, growth has cooled, and the once-worshipped 90x P/E has deflated to 50x. So is this a healthy correction, or is Tata Elxsi now living off past glory?
🧬 Business Breakdown: Where Design Meets Deep Tech
🔧 Software Development & Services (SDS) = ~97% of revenue
This vertical is further divided into:
- 🚗 Transportation (~53%)
- Automotive software, AUTOSAR, ADAS, EV platform integration
- Clients: Global OEMs + Tier-1s
- 📺 Media & Communications (~33%)
- OTT platforms, broadcast automation, 5G integration
- 🏥 Healthcare & Devices (~13%)
- Digital health, AI for diagnostics, embedded software for medical devices
📊 5-Year Financial Performance: High-Class Numbers with a Hint of Slowdown
| Year | Revenue (₹ Cr) | EBITDA (₹ Cr) | EBITDA Margin | PAT (₹ Cr) | EPS (₹) | ROCE | ROE |
|---|---|---|---|---|---|---|---|
| FY21 | 1,826 | 524 | 29% | 368 | ₹59.1 | 40% | 34% |
| FY22 | 2,471 | 767 | 31% | 550 | ₹88.3 | 48% | 34% |
| FY23 | 3,145 | 962 | 31% | 755 | ₹121.3 | 48% | 34% |
| FY24 | 3,552 | 1,047 | 29% | 792 | ₹127.2 | 43% | 30% |
| FY25 | 3,729 | 974 | 26% | 785 | ₹126.0 | 36% | 29% |
📌 TL;DR:
- Revenue almost doubled in 5 years
- EBITDA margin peaked in FY22, now compressing due to wage inflation & delayed spending from global clients
- Still elite-level return ratios… just less “wow” than before
🧠 But Why Did Growth Cool Off?
A few likely culprits:
- Macro Weakness in Global Tech Spending
- Especially from European automotive clients & OTT platforms
- Talent Costs Surged in FY23–24
- Wage inflation in India + employee retention = lower margins
- No New Segment Breakout
- AI, GenAI, and design have potential — but no “Jio moment” yet
- From Cult Stock to Value Realignment
- P/E derated from 90x to 50x. Not bad — just back to Earth 🌏
📉 Quarterly Performance Highlights
| Quarter | Sales (₹ Cr) | Net Profit (₹ Cr) | OPM | EPS (₹) |
|---|---|---|---|---|
| Q1 FY25 | 926 | 184 | 27% | 29.6 |
| Q2 FY25 | 955 | 229 | 28% | 36.8 |
| Q3 FY25 | 939 | 199 | 26% | 32.0 |
| Q4 FY25 | 908 | 172 | 23% | 27.7 |
🔻 Operating Margin dipped to 23% in Q4 — lowest in 3 years
📉 Profit declined 12% YoY, despite steady top line
💸 Dividend Payouts: Quietly Generous
| Year | EPS (₹) | Dividend (₹) | Payout % |
|---|---|---|---|
| FY21 | ₹59.1 | ₹48.0 | 81% |
| FY22 | ₹88.3 | ₹42.0 | 48% |
| FY23 | ₹121.3 | ₹61.0 | 50% |
| FY24 | ₹127.2 | ₹70.0 | 55% |
| FY25 | ₹126.0 | ₹75.0 | 60% |
☕ Stable payout ratio near 55–60%
💰 Yield ~1.17% at CMP of ₹6,418 — better than most tech peers
🧾 Balance Sheet: Zero Debt, Zero Drama
- ✅ Cash & Equivalents: ₹812 Cr
- ✅ No long-term borrowings
- ✅ ROCE: 36.3% | ROE: 29.3%
- ✅ Negative Working Capital
📉 So where’s the weakness?
🧯 Growth outlook is modest (~5–8% CAGR next 2 years)
📈 Stock Performance: Boom, Peak, Plateau
| Period | CAGR |
|---|---|
| 10-Year | 27% |
| 5-Year | 49% |
| 3-Year | -6% |
| 1-Year | -12% |
From ₹900 in 2020 to ₹9,000 in 2022 — 10x in 2 years.
Now chilling at ₹6,400 — a 30% drop from ATH, but up 7x from pre-COVID
🧮 Fair Value Estimate (EduInvesting Style™)
📘 Method 1: P/E Normalization
- FY25 EPS = ₹126
- Sustainable P/E = 35x (given growth + return ratios)
📌 Fair Value = ₹126 × 35 = ₹4,410
📊 Method 2: PEG-Based Valuation
- 3-year Profit Growth = 13%
- Fair PEG = 1.5 → Implied P/E = 19.5
- Fair Value = ₹126 × 19.5 = ₹2,457 ❌ (too harsh for a debt-free ROE > 30% stock)
Let’s adjust PEG to 2 for quality premium:
👉 ₹126 × 25 = ₹3,150 ✅
🎯 Final Fair Value Range (EduInvesting Consensus)
₹3,800 – ₹4,500
Any price below ₹4,000 offers a more rational entry than the hype-driven ₹9,000 levels of 2022
👥 Shareholding Check
| Category | Mar 2023 | Mar 2025 |
|---|---|---|
| Promoters | 43.92% | 43.91% |
| FIIs | 13.85% | 12.73% ⬇️ |
| DIIs | 3.54% | 8.54% ⬆️ |
| Public | 38.67% | 34.82% |
📉 FIIs trimmed their stake
📈 Mutual Funds and DIIs almost doubled their exposure
⚖️ TL;DR — Still a Gem, Just Not a Growth Rocket (For Now)
✅ 5-Year PAT CAGR of 25%
✅ Zero debt, elite ROCE >35%
✅ Strong design & niche positioning
❌ Slowing revenue, margin compression
❌ P/E still high at 50x
🧘♂️ Ideal for: Long-term believers in design-led digital + niche tech plays
⛔ Avoid if: You want quick 2x in 12 months — this ship has already sailed (for now)
✍️ Written by Prashant | 📅 18 June 2025
Tags: Tata Elxsi, Tata Elxsi Recap, Tech Stock Valuation, Niche IT Stocks, Design Tech, Tata Group Stocks, Tata Elxsi Fair Value, Tata Elxsi vs TCS, 5-Year Recap, EduInvesting
