Tata Elxsi shares surged 2.8% on Friday, hitting a day’s high of Rs 7,980.30 on the BSE after the company posted a solid 14% growth in consolidated net profit for the second quarter ended September 30, 2024. The company’s net profit reached Rs 229 crore, up from Rs 200 crore in the same quarter last year.
Revenue Growth and Profit Expansion
Tata Elxsi’s revenue from operations rose 8% year-on-year to Rs 955 crore, compared to Rs 882 crore in the year-ago quarter. On a sequential basis, net profit grew by 27%, while revenues increased by 3% quarter-on-quarter.
The company’s operational efficiency, offshore delivery model, fiscal discipline, and differentiated service offerings contributed to an expansion in EBITDA margins, which improved by 70 basis points to 27.9% for the quarter.
Regional Performance and Business Segments
Revenue from Tata Elxsi’s India business saw a robust 31% year-on-year growth, while Japan and emerging markets experienced even stronger growth, with revenue up 82% year-on-year.
The transportation business remained a key growth driver, posting a revenue increase of 8.8% quarter-on-quarter. During the quarter, Tata Elxsi secured a landmark $50 million multi-year deal with a global original equipment manufacturer (OEM) headquartered in Europe.
This deal includes software-defined vehicle (SDV) platform development and multiple domains of automotive engineering, marking a strategic engagement to support next-generation mobility solutions for a world-leading automotive brand.
Additionally, Tata Elxsi entered into a strategic partnership with Nidec Corporation in Japan to support the group’s technology initiatives, particularly in the automotive market.
Challenges in Other Segments
The media and communication business reported a marginal decline of 1% quarter-on-quarter. However, the company remains optimistic about future growth, driven by network transformation offerings and Gen AI-led innovation to shape the future of media.
In the healthcare and life sciences segment, Tata Elxsi saw a 10% decline in topline quarter-on-quarter, attributed to delays in renewing and starting new programs with a key U.S.-based customer.
Despite these challenges, Tata Elxsi continues to make significant strides in its core segments, further strengthening its position in the global technology services market.
Stock Performance in Last One Year
In terms of stock performance, Tata Elxsi faced a mixed bag of results. In the last month, the stock tried to secure positive returns at 1.01%, showcasing a modest upward movement. Contrastingly, the past six months were challenging, with the stock experiencing negative returns of 1.46%, indicating a period of decline.
Year-to-date figures continued in negative territory, depicting a decline of -12%. However, over the last twelve months, the stock managed to maintain positive returns of 6.24%, highlighting its resilience in the longer term.
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