Tata Technologies Vs Tata Elxsi: Since the pre-independence era, the Tata Group has transformed the Indian landscape in terms of employment, opportunities, and national contribution. They expanded their business into steel, power, textiles, and hotels.
The ever-changing dynamics of technology have compelled every industry to adapt and follow. The group includes a variety of IT business verticals. In this article, we will look deep into the Financials, future plans and company overview of Tata technologies and Tata Elxsi.
Tata Technologies Vs Tata Elxsi – Company Overview
Tata Technologies – Company Overview
Tata Technologies is a global leader in product engineering and digital services. They help companies improve their products and provide better experiences. Tata Technologies offers outsourced product engineering, digital transformation, upskilling, and value-added reselling of essential software products.
They have 11,000+ employees across 19 global delivery centers and work in industries such as automotive, industrial, heavy machinery, and aerospace.
Tata Technologies – Segment Analysis
In FY23, the company’s revenue came from two segments: service (80%) and technology solutions (20%). 48.50% of the total revenue from operations comes from three major customers.
Geographically, North America (21.44%), Europe (22.83%), India (29.76%), and the rest of the world (25.97%) accounted for the operating revenue in FY23.
Tata Elxsi – Company Overview
Tata Elxsi was founded in 1989 and is headquartered in Bengaluru. To develop and promote electronic, embedded, and software applications, the company used cutting-edge technologies and encouraged innovation. Tata Elxsi currently provides design and technology services to industries including automotive, broadcast, communications, healthcare, and transportation.
Tata Elxsi helps clients improve their products and services by leveraging design thinking and digital technologies like IoT (Internet of Things), cloud computing, mobility, virtual reality, and artificial intelligence (AI).
The company has over 11,000 employees, a customer base, and a presence in 16 countries. It operates across three business verticals: automotive, media, broadcast and communication, and healthcare.
Tata Elxsi – Segment Analysis
In FY23, the company earns 97.49% of its revenue from software development and services, with the remainder coming from system integration and support services, accounting for 2.50%.
In FY23, the company’s revenue was spread across geographies, with India accounting for 16.58%, the United States accounting for 42.06%, Europe accounting for 36.23%, and the rest of the world accounting for 5.13%.
Tata Technologies vs Tata Elxsi – Industry Overview
India’s technology industry is on track to double revenue to $500 billion by 2030. NITI Aayog predicts that artificial intelligence (AI) will boost India’s annual growth rate by 1.3% by 2035.
By 2026, widespread cloud utilisation can provide employment opportunities to 14 million people and add US$ 380 billion to India’s GDP. These advancements have the potential to improve the operation of any industry by increasing efficiency and accuracy.
The Advanced Driver Assistance System (ADAS) component market is expected to touch $1 billion by 2028. The rapid adoption of artificial intelligence (AI) and machine learning will contribute to the growth of this industry, particularly in the automobile sector.
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Tata Technologies vs Tata Elxsi – Financials
Revenue and Net Profit
Tata Technologies revenue from operations stood at Rs. 4,414.17 crore compared to Rs. 3,529.58 crore, an increase of 25%. Net profits were Rs. 624.03 crore in FY23 as compared to Rs. 436.99 crore in FY22, an increase of 42.80%.
Tata Elxsi’s operating revenue increased by 27.27% to Rs. 3,144.72 crore from Rs. 2,470.79 crore. Net profits were Rs. 755.19 crore in FY23 as compared to Rs. 549.67 crore in FY22, an increase of 37.38%.
| Particulars/ Financial Year | Revenue (Cr.) | ||
|---|---|---|---|
| Tata Tech | Tata Elxsi | ||
| 2022-23 | ₹ 4,414.17 | ₹ 3,144.72 | |
| 2021-22 | ₹ 3,529.58 | ₹ 2,470.79 | |
| 2020-21 | ₹ 2,380.91 | ₹ 1,826.15 | |
| 2019-20 | – | ₹ 1,609.86 | |
| 2018-19 | – | ₹ 1,596.93 | |
| CAGR (4 Years) | – | 18.46% | |
Both companies have performed well, and their revenues are steadily increasing. According to data available for Tata Technologies beginning in FY21, both companies have increased their revenues at a steady pace, with Tata Tech and Tata Elxsi having 36.18% cagr for two years and 18.46% cagr for four years.
Both companies’ net profits have grown exponentially and are steadily increasing. Tata Tech and Tata Elxsi had a CAGR of 61.58% for two years and 27.02% for four years, respectively.
| Particulars/ Financial Year | Net Profit (Cr.) | ||
|---|---|---|---|
| Tata Tech | Tata Elxsi | ||
| 2022-23 | ₹ 624.03 | ₹ 755.19 | |
| 2021-22 | ₹ 436.99 | ₹ 549.67 | |
| 2020-21 | ₹ 239.17 | ₹ 368.12 | |
| 2019-20 | – | ₹ 256.10 | |
| 2018-19 | – | ₹ 289.96 | |
| CAGR (4 Years) | – | 27.02% | |
Profit Margins
The OPM of Tata Tech was 19% and Tata Elxsi was 31% in FY23. Both companies have impressive margins. There is a rise in outsourcing & consulting charges from 12.90% to 15.46% compared to revenue for Tata Tech. Around 50% of the revenue is covered by employee expenses for Tata Elxsi and there has been a decreasing trend. The margins for Elxsi are greater than Tata Tech.
| Particulars/ Financial Year | OPM (%) | ||
|---|---|---|---|
| Tata Tech | Tata Elxsi | ||
| 2022-23 | 19% | 31% | |
| 2021-22 | 18% | 31% | |
| 2020-21 | 16% | 29% | |
| 2019-20 | – | 21% | |
| 2018-19 | – | 26% | |
| Average (5 Years) | – | 27.60% | |
NPM of Tata Tech and Tata Elxsi was 14.13% and 24.01% in FY23. The OPM impacts the NPM and Tata Elxsi fares better than Tata Tech in this scenario. Tata Tech and Elxsi’s other income trended upward and accounted for nearly 10% for Elxsi, and around 14% for Tata Tech of their net profits. Any investor looking at net profits should be aware of the rise in non-core income.
| Particulars/ Financial Year | NPM (%) | ||
|---|---|---|---|
| Tata Tech | Tata Elxsi | ||
| 2022-23 | 14.13% | 24.01% | |
| 2021-22 | 12.38% | 22.24% | |
| 2020-21 | 10.04% | 20.15% | |
| 2019-20 | – | 15.90% | |
| 2018-19 | – | 18.15% | |
| Average (5 Years) | – | 20.09% | |
Return Ratios
In FY23, Tata Tech and Tata Elxsi had RoEs of 20.87% and 36.20%, respectively. There is a increasing trend in RoE and indicates better utilisation of shareholder fund. Increased returns indicate a higher return on additional capital compared to previous year capital. It is a positive sign for companies to get better returns.
| Particulars/ Financial Year | RoE (%) | ||
|---|---|---|---|
| Tata Tech | Tata Elxsi | ||
| 2022-23 | 20.87% | 36.20% | |
| 2021-22 | 19.16% | 34.33% | |
| 2020-21 | 11.16% | 27.22% | |
| 2019-20 | – | 23.49% | |
| 2018-19 | – | 30.75% | |
| Average (5 Years) | – | 30.39% | |
In FY23, Tata Tech and Tata Elxsi had RoCEs of 25.22% and 41.73%, respectively. The rise in profits and better returns had better returns for both the companies. However, Tata Elxsi returns slightly down in FY23 due to slight increase in interest cost.
Both companies have decent margins. Tata Elxsi has higher margins than Tata Tech, as it has perfomed as nearly 40% to 45% return on capital employed. However, both companies’ RoCE is greater than their RoE, indicating better debt utilisation.
| Particulars/ Financial Year | RoCE (%) | ||
|---|---|---|---|
| Tata Tech | Tata Elxsi | ||
| 2022-23 | 25.22% | 41.73% | |
| 2021-22 | 24.13% | 42.91% | |
| 2020-21 | 14.15% | 35.65% | |
| 2019-20 | – | 30.55% | |
| 2018-19 | – | 45.30% | |
| Average (5 Years) | – | 39.22% | |
Debt Analysis
Tata Technologies and Tata Elxsi have had little or no debt for the last five years, and their interest coverage ratio is irrelevant because they have a better ratio.
Shareholding
Tata Technologies had a promoter stake of 55.40% in December 2023, with Tata Motors holding the majority stake of 53.39%. FII holdings include prominent investors such as TPG, which owns 9%, and Alpha Tc, which owns 4.86% of the company.
As of December 2023, Tata Elxsi had a 42.22% promoter stake, with Tata Sons holding the majority. The LIC owns 1.97%, while the FII owns 15.02% of the company.
Tata Technologies Vs Tata Elxsi – Key Metrics
Here are some of the key metrics of Tata Technologies and Tata Elxsi.
| Particulars | Tata Technologies | Tata Elxsi |
|---|---|---|
| CMP | ₹ 1,142.20 | ₹ 8,355.25 |
| Market Cap (Cr.) | ₹ 46,333 | ₹ 52,033 |
| EPS (TTM) | ₹ 15.40 | ₹ 126.06 |
| RoE (%) | 20.87% | 36.20% |
| RoCE (%) | 25.22% | 41.73% |
| Stock P/E (TTM) | 74.3 | 36.59 |
| Current Ratio | 1.92 | 4.83 |
Tata Technologies vs Tata Elxsi – Future Plans
Tata Technologies
- The company has invested in technologies such as CNAPP (cloud-native application protection platform), which enables the integration of multiple sites without requiring the use of physical networks.
- Tata Tech plans to enter and explore opportunities in high technology and medical equipment in the future.
Tata Elxsi
- Elxsi has been selected as a strategic software development partner for an SDV multi-year deal from a Global Automotive OEM.
- The company plans to increase its workforce to 200 employees for an innovation hub to aid with the development of research and development for green mobility.
Conclusion
As we are at the end of the article Tata Technologies Vs Tata Elxsi, we will look at the company in brief. Both companies are in the IT sector, which is facing headwinds as the global economy slows. The TATA brand is etched in people’s memories, and it would have a positive impact on the company’s image.
Tata Elxsi has a more diverse revenue base than Tata Technologies, which is relatively new to the public markets and must understand the company’s prospects in the coming years. What do you think about the prospects of the company? Let us know your views in the comments section below.
Written by Santhosh
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