This under-the-radar Tata Group tech stock has doubled in a year. What gives?

When one talks about the technology sector exposure of Tata Group, the only company that comes to mind is Tata Consultancy Services (TCS). The largest IT company in the country by revenue and carrying a market cap of nearly $1.3 trillion is a juggernaut in itself.

But there is another low-key tech company run under the group that has been slowly making its mark far away from the crowds.

Tata Elxsi, amongst the world’s leading providers of design-led technology services, saw a spurt in its share price and was among the traded value toppers on Friday after posting robust results for the first quarter a day before.

The company, whose share price has nearly doubled in the last one year, reported Rs 725.9 crore revenue from operations, a growth of 6.5% sequentially and 30% compared to the year ago in the three months ended June 30, 2022. Profit after tax grew 15.4% QoQ and 62.9% YoY to Rs 184.7 crore.

The company’s growth was primarily volume led, with all three segments of Embedded Product Design (EPD), Industrial Design & Visualisation (IDV) and System Integration & Support (SIS) showing robust growth of 6.2%, 6.6% and 19.8% QoQ, respectively.

Among key sectors: transportation grew 6.3% QoQ and 41.8% YoY, aided by large deals and engagements in EV and Software Defined Vehicles; healthcare grew 10% QoQ and 53.6% YoY, driven by digital health and global regulatory services.

Among others, media and communications grew 4.7% QoQ and 29% YoY, aided by continued growth in key accounts and large deals in network transformation and adtech.

The firm added 771 employees last quarter, more than twice what it added in the previous quarter and is now expanding its delivery presence with a new center in Kozhikode. It now has over 10,000 employees who help the company’s client with design thinking and application of digital technologies such as IoT (Internet of Things), Cloud, Mobility, Virtual Reality and Artificial Intelligence.

Management commentary

Manoj Raghavan, CEO and Managing Director, Tata Elxsi, said the company is starting FY23 on a strong note with 6.5% QoQ revenue growth in constant currency.

“This was all volume-led and supported by robust growth across divisions, verticals and key markets. We continue to maintain and expand our margins with our EBITDA growing at 58.8% YoY and PAT growing at 62.9% YoY. We are entering the second quarter with a strong order book and a healthy deal pipeline across key markets and industries.”