Tata Technologies vs. Tata Elxsi
Tata Technologies vs Tata Elxsi: Since the pre-independence era, the Tata Group has transformed the landscape of India in terms of employment, opportunities and contribution to the country. They expanded into steel, power, textiles, hotels, etc.
The ever-changing dynamics of technology are forcing all industries to adapt and follow suit. This group includes various IT business sectors. In this article, we will take a closer look at Tata Technologies and Tata Elxsi’s finances, future plans, and company overview.
Tata Technologies vs Tata Elxsi – Company Overview
Tata Technologies – Company Overview
Tata Technologies A global leader in product engineering and digital services. This helps companies improve their products and deliver better experiences. Tata Technologies provides outsourced product engineering, digital transformation, technology enhancement and value-added resale of essential software products.
The company has more than 11,000 employees across 19 global delivery centers, working in industries including automotive, industrial, heavy equipment and aerospace.
Tata Technologies – Segment Analysis
In FY23, the company’s revenue came from two segments: Services (80%) and Technology Solutions (20%). 48.50% of total operating revenue comes from three major customers.
Regionally, North America (21.44%), Europe (22.83%), India (29.76%) and Rest of the World (25.97%) accounted for FY23 operating revenue.
Tata Elxsi – Company Overview
tata elk city It was founded in 1989 and is headquartered in Bengaluru. To develop and promote electronic, embedded and software applications, the company used cutting-edge technology and encouraged innovation. Tata Elxsi currently provides design and technology services to industries including automotive, broadcasting, telecommunications, healthcare and transportation.
Tata Elxsi leverages design thinking and digital technologies such as the Internet of Things (IoT), cloud computing, mobility, virtual reality and artificial intelligence (AI) to help customers improve their products and services.
The company has more than 11,000 employees and a customer base and is present in 16 countries. It operates in three business segments: Automotive, Media, Broadcasting & Telecommunications, and Healthcare.
Tata Elxsi – Segment Analysis
In FY23, the company earned 97.49% of its revenue from software development and services, with the remainder coming from systems integration and support services, which accounted for 2.50%.
In FY23, the company’s revenue was spread across multiple geographies, with India accounting for 16.58%, US accounting for 42.06%, Europe accounting for 36.23% and Rest of the World accounting for 5.13%.
Tata Technologies vs Tata Elxsi – Industry Overview
India’s technology industry is set to double its revenues to $500 billion by 2030. NITI Aayog predicts that artificial intelligence (AI) will increase India’s annual growth rate by 1.3% by 2035.
By 2026, widespread cloud uptake could provide employment opportunities for 14 million people and add US$380 billion to India’s GDP. These advancements have the potential to improve the operations of all industries by increasing efficiency and accuracy.
The advanced driver assistance systems (ADAS) component market is expected to reach $1 billion by 2028. The rapid adoption of artificial intelligence (AI) and machine learning will contribute to the growth of this industry, especially the automotive sector.
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Tata Technologies vs Tata Elxsi – Finance
Sales and Net Profit
Tata Technologies’ operating revenue is Rs. 4,414.17 crore compared to Rs. 3,529.58 crore, an increase of 25%. The net profit was Rs. 624.03 crore in FY23 compared to Rs. It increased by 42.80% to ₹436.99 crore in FY22.
Tata Elxsi’s operating revenue increased by 27.27% to Rs. 3,144.72 crore from Rs. 2,470.79 crore. The net profit was Rs. 755.19 crore in FY23 compared to Rs. It increased by 37.38% to $549.67 million in FY22.
Both companies have performed well and sales are steadily increasing. Data available from Tata Technologies from FY21 shows that both companies have been growing their revenues at a steady pace, with Tata Tech and Tata Elxsi recording a CAGR of 36.18% over two years and 18.46% CAGR over four years.
The net profits of both companies have grown exponentially and are growing steadily. Tata Tech and Tata Elxsi recorded a CAGR of 61.58% over two years and 27.02% over four years, respectively.
profit
As of FY23, Tata Tech’s OPM was 19% and Tata Elxsi’s was 31%. Both companies have impressive margins. Outsourcing and consulting costs compared to Tata Tech’s sales increased from 12.90% to 15.46%. Tata Elxsi is covering about 50% of its revenue from employee costs, which are declining. Elxsi’s margins are greater than Tata Tech’s.
FY23 NPM for Tata Tech and Tata Elxsi was 14.13% and 24.01%. OPM impacts NPM and in this scenario Tata Elxsi rates are better than Tata Tech. Tata Tech and Elxsi’s other revenues are on the rise, accounting for about 10% of net profit for Elxsi and about 14% for Tata Tech. Any investor looking at net income should be aware of the increase in non-core income.
rate of return
In FY23, the RoE of Tata Tech and Tata Elxsi were 20.87% and 36.20%, respectively. RoE tends to increase, indicating better utilization of shareholder funds. Increasing returns mean a higher rate of return on additional capital compared to the previous year’s capital. It is a positive sign that a company can achieve better returns.
In FY23, the RoCE of Tata Tech and Tata Elxsi were 25.22% and 41.73%, respectively. Increased profits and better returns have resulted in better returns for both companies. However, Tata Elxsi declined slightly in FY23 due to a slight increase in interest expenses.
Both companies have decent margins. Tata Elxsi has higher margins than Tata Tech as its return on equity is nearly 40-45%. However, both companies’ RoCE is higher than their RoE, indicating better debt utilization.
debt analysis
Tata Technologies and Tata Elxsi have had little to no debt over the last five years and their interest coverage ratios are not relevant as they have better ratios.
stock holdings
As of December 2023, Tata Technologies holds a 55.40% promoter stake, and Tata Motors holds a majority shareholder stake of 53.39%. FII holdings include prominent investors such as TPG, which owns 9% of the company, and Alpha Tc, which owns 4.86% of the company.
As of December 2023, Tata Elxsi holds 42.22% promoter stake, with Tata Sons holding the majority. LIC holds 1.97% stake in the company and FII holds 15.02%.
Tata Technologies vs Tata Elxsi – Key Indicators
Below are some of the key indicators of Tata Technologies and Tata Elxsi:
Tata Technologies vs Tata Elxsi – What’s next?
Tata Technologies
- The company has invested in technologies such as the Cloud Native Application Protection Platform (CNAPP), which allows for consolidation of multiple sites without using a physical network.
- Tata Tech plans to enter the advanced technology and medical equipment fields and seek opportunities in the future.
tata elk city
- Elxsi has been selected as the strategic software development partner for a global automotive OEM’s multi-year SDV contract.
- The company plans to increase its staff to 200 for an innovation hub to support research and development in green mobility.
conclusion
Tata Technologies Vs Tata Elxsi At the end of the article, we will take a brief look at the company. Both companies are in the IT sector and are facing headwinds as the global economy slows. The TATA brand will remain imprinted in people’s memories and have a positive impact on the corporate image.
Tata Elxsi is relatively new to the public markets and has a more diversified revenue base than Tata Technologies, which requires understanding the company’s prospects going forward. What do you think about the company’s prospects? Let us know your thoughts in the comments section below.
Written by Santosh
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