Revenue grew 27% y-o-y to Rs2,940 million (vs. our estimate of Rs2,891 million), led by embedded product development (EPD) division (up 27% y-o-y) with a revenue contribution of 79%. EBITDA grew 42% y-o-y to Rs672 million (vs. our estimate of Rs672 million) as EBITDA margin expanded by 230bp y-o-y to 22.8% (vs. our estimate of 23.2%). The quarter was characterised by GBP depreciation, which along with a higher share of Systems Integration (7% of revenue), impacted margin. PAT grew 38% y-o-y to Rs411 million (vs. our estimate of Rs393 million). Europe contributed 40% and US comprised 37-38% of total revenue. Management highlighted that revenue from India is picking up. Revenue growth for FY16 stood at 26.6%, with 90% contributed by volume and 10% by exchange benefits.
Management highlighted that the deal pipeline for Broadcast was currently the strongest in comparison to previous quarters with over- the-top content also gaining momentum. Tata Elxsi recently provided OTT services to one of its Indian customers. The growth in Automotive was double that of the Broadcast business in Q4FY16. Given the company’s strong set of capabilities built over the last 25 years in the areas of Technology, Engineering and Design, as well as its standing as a strong play on IoT, we recommend ‘buy’ with a price target of Rs2,200 — 25x FY18E EPS.
