(Reuters) -Indian engineering and technology services firm Tata Elxsi reported a smaller-than-expected first-quarter profit on Thursday as industry-and customer-specific issues affected R&D spend across geographies.
However, the company, which relies heavily on the auto sector, said it expects a steady improvement in margins and profit through the rest of the year, with its main units expected to return to growth in the current quarter.
Tata Elxsi’s first-quarter net profit dropped 21.6% to 1.44 billion rupees ($16.8 million), compared to analysts’ average estimate of 1.6 billion rupees, according to data compiled by LSEG.
Revenue fell 3.7% to 8.92 billion, missing analysts’ estimate of 9 billion rupees. Revenue from its transport unit, its biggest, declined 5.3%.
KEY CONTEXT
The U.S. trade policies have weighed on the auto sector and, in turn, on Indian engineering, research and design (ER&D) firms such as Tata Elxsi that are dependent on outsourced work from U.S. and European clients, analysts have said.
Tata Elxsi, which counts Jaguar Land Rover as its largest client, has said in April that its top customers from the auto industry has paused a number of projects due to tariff issues.
Its peers L&T Technology Services and KPIT Technologies will report results later this month.
PEER COMPARISON
Valuation (next Estimates (next 12 Analysts’ sentiment
12 months) months)
RIC PE EV/EBIT Revenue Profit Mean # of Stock to price Div yield
DA growth(%) growth(%) rating* analysts target** (%)
Tata Elxsi 46.38 34.12 6.96 4.42 Sell 12 1.29 1.21
L&T Technology Services 31.10 19.65 13.52 12.67 Hold 28 0.96 1.26
KPIT Technologies 37.94 22.64 13.37 6.95 Buy 17 0.91 0.67
Tata Technologies 38.21 27.99 3.44 7.35 Sell 10 1.12 1.19
* Mean of analysts’ ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell ** Ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
APRIL-JUNE STOCK PERFORMANCE
— All data from LSEG
($1 = 85.6620 Indian rupees)
(Reporting by Aleef Jahan; Editing by Savio D’Souza)
