Tata Elxsi Ltd. shares are expected to remain in focus on Wednesday, 15 July, after the company reported a mixed performance for the first quarter, with revenue rising marginally while profit and operating margins came under pressure.
The stock closed at Rs 3,697.3 apiece, losing 3.3% on Tuesday, 14 July, wiping off last week's gains.
Profit Declines Despite Revenue Growth
The technology and design services company reported a 22.6% quarter-on-quarter decline in the net profit to Rs 171 crore, compared with Rs 220 crore in the March quarter.
Revenue increased 2.8% sequentially to Rs 1,021 crore, up from Rs 994 crore in the previous quarter, indicating stable business momentum despite a cautious demand environment.
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Operating Margins Weaken Sequentially
At the operating level, EBIT declined 12.4% quarter-on-quarter to Rs 193.8 crore, compared with Rs 221.3 crore in the previous quarter.
The company's EBIT margin narrowed to 19% from 22.3%, reflecting pressure on profitability during the quarter. The margin contraction weighed on earnings despite the modest improvement in revenue.
Though sequentially the numbers have declined, the company witnessed growth in revenue, profits, and operating margins year-on-year, and commenting on the same, Tata Elxsi CEO and MD said, “For the quarter, Tata Elxsi delivered a healthy performance with growth in our two primary verticals, supported by strong deal execution and continued momentum in large strategic engagements. We also crossed a key milestone of reporting operating revenue of more than Rs. 1,000 crores in the current quarter. The performance in the quarter reflects the strength and increasing relevance of our design-led and AI-enabled engineering capabilities in our chosen industries.”
Share Price Performance
Apart from Tuesday's decline, the stock has lost over 41.8% in the past year, when the benchmark index Nifty 200 was down by only 0.81%.
The stock has lost over 8.8% in the past month but witnessed a turnaround during the past week, which was again wiped out by yesterday's decline.
The stock traded between Rs 3,562 and Rs 6,439.5 apiece in the past 52 weeks and is currently trading at a price-to-earnings multiple of 37.9 times.
The market cap of Tata Elxsi at the end of the previous trading session stood at Rs 23,112.2 crore.
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