Shares of Tata Elxsi Ltd gained over a percent on October 11 after the engineering and technology services firm reported a 15 percent rise in its second-quarter profit to Rs 229 crore, fuelled by healthy demand in its transportation wing. Its revenue from operations rose 8 percent YoY to Rs 955 crore.
Tata Elxsi's revenue from the transportation unit grew 16 percent YoY on the back of deals signed in the quarter, including a $50 million multi-year contract with a European company. The division accounts for about 55.7 percent of revenue in the company's software development and services segment, contributing more than 97 percent to total revenue.
At 9:20 am, Tata Elxsi stock was trading 1.2 percent higher at Rs 7,864.30 on the National Stock Exchange (NSE) in the previous session. The stock has fallen around 10 percent so far this year, underperforming Nifty's returns of 14 percent.
In the past 12 months, the counter has risen around 7 percent. In comparison, Nifty rose 27 percent during this period.
The company's operational and offshore delivery excellence, fiscal discipline, and differentiated offerings, contributed to EBITDA margins expanding by 70 basis points to 27.9 percent for the quarter, said Manoj Raghavan, CEO and Managing Director, Tata Elxsi.
On a sequential basis, Tata Elxsi's net profit grew by 24.6 percent with the superior bottom-line performance further aided by R&D incentives and tax credits from previous years.
The firm's strategic focus on expanding business in Japan, and emerging markets and capitalizing on the India opportunity, is now starting to significantly contribute to growth, noted Raghavan.
The transportation business continues to power growth for the company Its deep and scaled ADAS, Connected, Electric, and Software Defined Vehicle (SDV) capabilities are helping the company win large deals with global OEMs across the world, positioning it well for the continued transformation of the automotive industry, the CEO added.
Notably, engineering, research, and design (ER&D) services, which include technology support to industries such as automotive and communications, contribute a sixth of the revenue to India's $254-billion technology sector.
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