Tata Elxsi demonstrated fast growth in recent years. Will the growth continue?
05-05-2016 • About Tata Elxsi (
$TATAELXSI) • By InTwits
Tata Elxsi is a fast-growing stock in IT Software Products industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
Tata Elxsi showed fast growth in the last financial year. Tata Elxsi's revenue surged on 26.6% in FY2016. EBITDA also increased considerably: 39.3% for the same period.
In the last 3 years the company showed fast revenue growth of 20.0% from FY2013 to FY2016 annually. EBITDA surged on 49.6% from FY2013 to FY2016 annually.
Tata Elxsi ($TATAELXSI) financials for the last 5 years
| mln. INR | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Revenue | 5,387 | 6,217 | 7,748 | 8,494 | 10,752 |
|---|
| Revenue growth, % | | 15.4% | 24.6% | 9.6% | 26.6% |
|---|
| SG&A, % | | | | | |
|---|
| EBITDA | 743 | 738 | 1,365 | 1,773 | 2,471 |
|---|
| EBITDA growth, % | | -0.7% | 84.9% | 29.9% | 39.3% |
|---|
| EBITDA margin, % | 13.8% | 11.9% | 17.6% | 20.9% | 23.0% |
|---|
| Net Income | 346 | 213 | 723 | 1,020 | 1,548 |
|---|
| Net Income margin, % | 6.42% | 3.43% | 9.33% | 12.0% | 14.4% |
|---|
| |
| CAPEX | 287 | 338 | 240 | 331 | 382 |
|---|
| CAPEX/Revenue, % | 5.33% | 5.44% | 3.10% | 3.89% | 3.55% |
|---|
| Debt | 342 | 585 | 0 | 0 | 0 |
|---|
| Cash | 120 | 125 | 362 | 1,212 | 1,793 |
|---|
| Net Debt/EBITDA | 0.3x | 0.6x | -0.3x | -0.7x | -0.7x |
|---|
| |
| ROIC, % | 22.5% | 19.1% | 38.3% | 55.4% | 65.9% |
|---|
| ROE, % | 18.5% | 11.0% | 33.5% | 39.3% | 46.3% |
|---|
Profitability and return on investment
EBITDA growth was supported by margin expansion. EBITDA margin surged on 2.10 pp from 20.9% to 23% in FY2016. In the last 3 years EBITDA margin surged on 11.1 pp from 11.9% in FY2013 to 23% in FY2016.
We call Tata Elxsi an attractive growth stock as together with the growth it delivers high ROIC at 65.9%. During the last three years it surged - it was 19.1% in FY2013. It's average ROIC for the last three years was 53.2%.
Tata Elxsi's Net Income margin surged on 2.40 pp from 12% to 14.4% in FY2016. In the last 3 years Net Income margin surged on 11 pp from 3.40% in FY2013 to 14.4% in FY2016.
Tata Elxsi operates at ROE of 46.3%. For the last three years the average ROE was 39.7%.
Capital expenditures (CAPEX)
In FY2016 the company had CAPEX/Revenue of 3.55%. Tata Elxsi's CAPEX/Revenue dropped on 1.89 pp from 5.44% in FY2013 to 3.55% in FY2016. It's average level of CAPEX/Revenue for the last three years was 3.52%.
Leverage (Debt)
The company has negative net debt at -0.7x Net Debt/EBITDA - at the same time with high growth. In the last 3 years leverage dropped on 1.35x from 0.62x in FY2013 to -0.73x in FY2016.
Management team
Tata Elxsi is headed by Madhukar Dev as a CEO and by K Ramaseshan as a CFO.
Peers in IT Software Products
Below we provide Tata Elxsi benchmarking against other companies in IT Software Products industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Twinstar Industries ($TWINSTAR) | 204.5% | 59.8% | 38.8% | 40.3% | |
| Atishay Infotech ($ATISHAY) | -25.4% | 6.9% | 21.8% | 28.2% | |
| Dion Global Solutions ($DION) | 40.4% | 40.8% | -9.5% | 27.8% | |
| Avance Technologies ($AVANCE) | -11.7% | -17.9% | -30.8% | 20.3% | |
| Softsol India ($SOFTSOL) | -10.4% | 9.3% | -20.4% | 14.1% | |
| |
|---|
| Median (16 companies) | 13.9% | 17.7% | 14.2% | 9.4% | -48.0% |
|---|
| Tata Elxsi ($TATAELXSI) | | 15.4% | 24.6% | 9.6% | 26.6% |
Top companies by EBITDA margin, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Atishay Infotech ($ATISHAY) | 35.7% | 28.1% | 25.8% | 24.5% | |
| Subex ($SUBEX) | 27.3% | 17.0% | 24.9% | 23.6% | |
| Cambridge Technology Enterprises ($CTE) | | | | 20.9% | |
| Virinchi Technologies ($VIRNICHIQ) | | | | 17.4% | |
| Aurionpro Solutions ($AURIONPRO) | 15.9% | 14.5% | 12.0% | 16.9% | |
| |
|---|
| Median (23 companies) | 7.5% | 8.5% | 9.9% | 9.2% | 4.0% |
|---|
| Tata Elxsi ($TATAELXSI) | 13.8% | 11.9% | 17.6% | 20.9% | 23.0% |
Top companies by CAPEX/Revenue, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Aurionpro Solutions ($AURIONPRO) | 17.5% | 12.3% | 12.6% | 13.4% | |
| Mastek ($MASTKBBPH) | 2.2% | | 0.0% | 4.9% | 2.4% |
| Dion Global Solutions ($DION) | 39.9% | 11.9% | 29.6% | 4.0% | |
| Polaris Financial Technology ($POLARIS) | 7.2% | 2.5% | 1.5% | 3.9% | |
| Datamatics Global Services ($DATAMATICS) | 20.2% | 3.1% | 12.9% | 2.2% | |
| |
|---|
| Median (9 companies) | 3.1% | 5.7% | 1.9% | 2.2% | 2.4% |
|---|
| Tata Elxsi ($TATAELXSI) | 5.3% | 5.4% | 3.1% | 3.9% | 3.6% |
Top companies by ROIC, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Mindteck (India) ($MINDTECK) | -2.6% | 1.2% | 20.0% | 17.5% | |
| Blue Star Infotech ($BLUESTINFO) | | 7.1% | 16.3% | 17.4% | |
| Polaris Financial Technology ($POLARIS) | 19.5% | 15.1% | 12.6% | 16.2% | |
| Aurionpro Solutions ($AURIONPRO) | 8.6% | 8.6% | 5.9% | 12.1% | |
| Datamatics Global Services ($DATAMATICS) | 9.8% | 11.4% | 16.4% | 11.3% | |
| |
|---|
| Median (31 companies) | 3.8% | 4.7% | 14.4% | 11.7% | 0.5% |
|---|
| Tata Elxsi ($TATAELXSI) | 22.5% | 19.1% | 38.3% | 55.4% | 65.9% |
Top companies by Net Debt / EBITDA
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Subex ($SUBEX) | 4.6x | 13.1x | 8.5x | 8.0x | |
| Dion Global Solutions ($DION) | 11.8x | 11.3x | | 7.4x | |
| Aurionpro Solutions ($AURIONPRO) | 1.7x | 1.7x | 1.9x | 1.2x | |
| Saksoft ($SAKSOFT) | 2.8x | 2.3x | 0.0x | 1.2x | |
| Datamatics Global Services ($DATAMATICS) | 0.5x | 0.3x | 0.5x | 0.3x | |
| |
|---|
| Median (19 companies) | 0.7x | 0.0x | 0.0x | 0.0x | -2.1x |
|---|
| Tata Elxsi ($TATAELXSI) | 0.3x | 0.6x | -0.3x | -0.7x | -0.7x |
