Looking for fundamental growth story? Pay attention to Tata Elxsi
29-04-2014 • About Tata Elxsi (
$TATAELXSI) • By InTwits
Tata Elxsi is an attractive growth stock in IT Software Products industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Tata Elxsi showed fast growth in the last financial year. The company's revenue surged on 24.6% in FY2014. Together with revenue growth Tata Elxsi also managed to keep EBITDA growth. EBITDA grew 84.9% for the same period.
In the last 3 years Tata Elxsi showed fast revenue growth of 23.0% from FY2011 to FY2014 annually. EBITDA surged on 42.5% from FY2011 to FY2014 annually.
Tata Elxsi ($TATAELXSI) financials for the last 5 years
| mln. INR | FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Revenue | 10,168 | 4,159 | 5,387 | 6,217 | 7,748 |
|---|
| Revenue growth, % | | -59.1% | 29.5% | 15.4% | 24.6% |
|---|
| SG&A, % | | | | | |
|---|
| EBITDA | 768 | 472 | 743 | 738 | 1,365 |
|---|
| EBITDA growth, % | | -38.6% | 57.5% | -0.7% | 84.9% |
|---|
| EBITDA margin, % | 7.56% | 11.4% | 13.8% | 11.9% | 17.6% |
|---|
| Net Income | 488 | 325 | 346 | 213 | 723 |
|---|
| Net Income margin, % | 4.80% | 7.82% | 6.42% | 3.43% | 9.33% |
|---|
| |
| CAPEX | 88 | 291 | 287 | 338 | 240 |
|---|
| CAPEX/Revenue, % | 0.863% | 6.99% | 5.33% | 5.44% | 3.10% |
|---|
| Debt | 340 | 254 | 342 | 585 | 0 |
|---|
| Cash | 143 | 208 | 120 | 125 | 362 |
|---|
| Net Debt/EBITDA | 0.3x | 0.1x | 0.3x | 0.6x | -0.3x |
|---|
| |
| ROIC, % | 30.1% | 13.2% | 22.5% | 19.1% | 38.3% |
|---|
| ROE, % | 29.9% | 18.2% | 18.5% | 11.0% | 33.5% |
|---|
Profitability and return on investment
Margin expansion supported EBITDA growth. Tata Elxsi showed fast EBITDA margin growth of 5.70 pp from 11.9% to 17.6% in FY2014. If we look for the longer period EBITDA margin surged on 6.20 pp from 11.4% in FY2011 to 17.6% in FY2014.
We call Tata Elxsi an attractive growth stock as together with the growth it delivers high ROIC at 38.3%. Three years ago it was considerably lower at 13.2%. It's average ROIC for the last three years was 26.6%.
Net Income margin surged on 5.90 pp from 3.40% to 9.30% in FY2014. If we look for the longer period Net Income margin surged on 1.50 pp from 7.80% in FY2011 to 9.30% in FY2014.
Tata Elxsi operates at ROE of 33.5%. Average ROE for the last three years was 21.0%.
Capital expenditures (CAPEX)
In FY2014 the company had CAPEX/Revenue of 3.10%. CAPEX/Revenue dropped on 3.89 pp from 6.99% in FY2011 to 3.10% in FY2014. It's average CAPEX/Revenue for the last three years was 4.63%.
Leverage (Debt)
The company has negative net debt at -0.3x Net Debt/EBITDA - at the same time with high growth. If we look for the longer period leverage dropped on 0.36x from 0.10x in FY2011 to -0.27x in FY2014.
Management team
Madhukar Dev is a CEO of Tata Elxsi.
