Tata Elxsi operates in two segments, namely, system integration and support, and software development and services (SDS). About 55-60% of the SDS revenue comes from automotive segment, 30% comes from broadcast segment and the remaining 10-15% comes from communications and medical equipments segment. e company’s revenue has grown at 16.9% CAGR over FY15-17, while its PAT has grown at CAGR of 32.1% over the same period. In the last three years, it has delivered average ROE of 40.5%. In Q3FY18, its EBITDA margin improved by 317 bps from 22.9% to 27.06% on a YoY basis due to better geographical and service mix. e PAT in Q3FY18 jumped by 42.2%. e company recently had developed two intellectual properties (IPs) named ‘Autonomai’ and ‘Falcon’ which are gaining momentum over the past few quarters. It is focusing to develop more such IPs for automotive and other emerging technologies. Going forward, the management expects the revenue would grow by 20% in the medium term.
CMP – 1045, Target – 1122, Stoploss – 980
Ahok Leyland is engaged in the manufacture of commercial vehicles and related components and has Scrip’s Movement operations in India, Sri Lanka, Bangladesh, Mauritius, Middle East and Africa. There was a huge jump in net pro t from 389.60 crore in FY16 to `1223.08 crore in FY17. In Q3FY18, the company’s revenue was up due to higher exports, price hikes and better product mix. Its EBITDA margin improved by 100 bps on a YoY points to 11.1%. e volumes of MHCV are expected to grow in double digits in FY18 and FY19. e LCV segment also has been performing well with EBITDA margin of 8-9%. e management is focusing to develop and launch new products in this segment over FY19. In FY18, the company planned capex of `600-700 crore for investment in R&D and technology related to electric vehicle. It has delivered ROE of 22.02% on TTM basis. Currently, the company is trading at attractive valuation with P/E of 23.15x.
CMP – 136, Target – 148, Stoploss – 128