Industry-leading margins continue for Tata Elxsi | Q3FY22 Conference Call Highlights

• Financial Highlights :

              Revenues from operations at Rs. 635.4 Cr, +6.7% QoQ, + 33.2 % YoY

              Constant currency revenue up 6.5% QoQ, 32.7% YoY

              EBITDA of ₹ 210.8 Cr; Growth of 14.8% QoQ and 46.8% YoY

              PBT % increased from 28.6% in Q2 to 31.2% in Q3

              EBITDA Margin at 33.2%; Net Margin at 23.5%

              EPS for Q3 at 24.24 INR; +20.4% QoQ, + 43.5% YoY

• The company’s growth was powered by Embedded Product Design (EPD), the company’s largest division, which grew at 9.9% QoQ and 36% YoY. Within EPD, the Transportation business posted a third quarter of strong growth of 9.7% QoQ and 30.9% YoY, with secular growth across Electric, Autonomous and Connected technologies, and continued momentum with both OEMs and suppliers for design, technology and digital services across geographies.
• Media & Communications delivered another quarter of consistent growth with 6.5% QoQ and 31.1% YoY growth respectively, supported by the addition of marque global customers, and strategic platform and solution-led multi-year deal wins.
• Healthcare continued its accelerated growth at 22% QoQ and 73.4% YoY, supported by large deals and continued growth in digital health, digital engineering and regulatory services
• Operating margins (31% in Q3FY22) over the quarters have improved due to operational leverage because of operational efficiencies improved utilization, improved offshore mix, robustness of demand, high quality of revenues.
• In the long term (2 to 4 years), the company has indicated that 40:40:20 will be the proportion of revenues from the transportation, media and communication & healthcare vertical respectively.  
• Industrial Design and Visualization (IDV) vertical was affected because one of the large client deals didn’t fructify. But it is temporary.
• They have diversified the automotive vertical from being largely passenger vehicle based (PV) to now PV, Commercial Vehicle (CV), farm equipment and rail over the last 6 to 8 quarters. Going forward these adjacencies will become nearly 20% of the automotive vertical.
• Nature of deals:  Most of the deals are 12 to 18 months long, although some of them do extend to 24 months.
• Attrition: From 13.9% in Q2FY22 to 18.2% in Q3FY22.