(Reuters) – Indian engineering and technology services firm Tata Elxsi reported a smaller-than-expected third-quarter revenue on Thursday, hurt by sluggish demand in its media and communications division.
The company’s revenue from operations rose 2.7% to 9.39 billion rupees ($109.40 million) for the quarter ended Dec. 31, below analysts’ estimate of 9.69 billion rupees, according to data compiled by LSEG.
Its net profit fell 3.6% to 1.99 billion rupees, but was in line with analysts’ expectations of 2 billion rupees.
Revenue from the company’s media and communications unit fell 5.5% year-on-year. The division accounts for about 32.4% of revenue from its software development and services segment, which, in turn, contributes more than 97% to total revenue.
Shares of the company closed 0.5% lower ahead of results on Thursday.
KEY CONTEXT
Engineering, research and design (ER&D) services – which include technology support to industries such as transportation and communications – contribute a sixth of the revenue to India’s $254 billion technology sector.
Tata Elxsi provides ER&D services for telecom and media players in areas such as advertising technology services and Wi-Fi testing services.
The company was negatively impacted in the quarter by a continuing slowdown in the communications business and headwinds in the automotive segment, analysts said.
L&T Technology Services will report results on Jan. 15.
PEER COMPARISON
Valuation (next Estimates (next 12 months) Analysts’ sentiment
12 months)
RIC PE EV/EBITD Revenue profit Mean # of Stock to price Div yield
A growth(%) growth(%) rating * analysts target ** (%)
Tata Elxsi Ltd 42.79 30.29 13.76 12.78 SELL 13 0.97 1.08
L&T Technology Services 33.42 21.45 12.75 13.97 SELL 27 0.99 1.05
Ltd
KPIT Technologies Ltd 44.04 27.07 17.17 20.87 BUY 15 0.85 0.46
Tata Technologies Ltd 45.66 31.29 11.59 16.05 HOLD 10 0.98 0.96
* 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
OCT-DEC STOCK PERFORMANCE
($1 = 85.8350 Indian rupees)
(Reporting by Aleef Jahan; Editing by Janane Venkatraman)
