Research Paper

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Dalal & Broacha Share Broking Pvt. Ltd.

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Starting Coverage snabel-a Dalal & Broacha

Struktur Elxsi Limited.

September doze, 2012

multiple triggers forward....

BUY Current Pri votre Target Selling price Upside 52 Week Range

KEY REVEAL DATA Marketplace Cap ELECTRONIC VEHICLES / Sales EV as well as EBIDTA Volume (BSE & NSE) Zero of o/s share mn Face Value Book Benefit BSE as well as NSE Reuters Bloomberg Shareholding (%) Period Promote rs MF as well as Ba nks / FI FII Publ i c & Other folks Total 135 120 128 100 85 80 seventy 60 55

Apurva Shah (Research Analyst) (022) 6714 1449 Milind Karmarkar (Head Research) (022) 6630 8667 Nilay Dalal (Equity Sales) (022) 6714 1443

Purchase Case:

Rs 233 Rs 283 21% Rs 167 / Rs 254

Rs 7. several BN/$0. 1BN 1 . 4 9. 9 48737 31. 1 12 61. 7 500408 / TATAELXSI TTEX. BO TELX IN Value Jun‐12 forty five. 1 7. 9 1 . 8 45. 2 75. 0 Mar‐12 45. 1 8. almost 8 2 . a couple of 43. being unfaithful 100. zero

Coming out of a bad patch among 2008-2011 because of ramp down of one of its clients in Japan, we anticipate Tata Elxsi (TELX) to grow by greater than twenty percent yoy in top collection over years to come. Though the general growth inside the company looks muted for the above cause, other geographies have delivered a robust progress during the same period. Japan now contributes only 10% to the total revenues in the previous 35-40%.

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Besides the above, growth during above period was muted because of Frustration in Visible computing business both in earnings and success Slower than expected rollout of key technologies and slowdown in global economic system

Going forward the key growth new driver for the corporation will be the embedded product design and the industrial design businesses. We believe that with the development in R& D spend in automobile segment as well as the multibillion buck opportunity in ICT along with roll out of LTE could be the key expansion drivers intended for TELX going forward. We likewise expect the VCL to breakeven over the next year. We anticipate both the ROCE & ROE to be above 30% by FY14 (18. 5% ROE and 23. 3% DISPUTA in FY12) due to low capex requirements and improvement in margins. We anticipate the company to keep up dividend pay out in the selection of 40-50%. In the CMP of Rs. 233 with a dividend yield of three. 0% and possibility of great growth in the years ahead, we such as the stock. View We believe that the company is not just like any other IT midcap companies because of its business structure. We expect that as the global overall economy revives, the company will immediately benefit from elevating spend in R& Deb and product launches. All of us expect leading line to grow simply by 22. 6% yoy for FY13-FY15 mainly because of higher growth in Item business, we all expect the results to grow by 35% yoy because of margin improvement due to higher non linear revenues. At CMP of Rs. 233 stock investments at 15. 5x FY13E earnings of Rs. 12-15 and 12. 4x FY14E earnings of Rs. twenty-two. 3. We recommend a ‘BUY' around the stock in current level with a value target of Rs. 283.

TELX

Sensex

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Dalal & Broacha Share Broking Pvt. Ltd.

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Firm Background

Acara susunan acara Elxsi Ltd.

Tata Elxsi is a design and style company that blends technology, creativity and engineering to aid customers. Excellent unique mixture of licensable IPs, design frameworks and inserted design providers which will help product businesses and Oes to kick off their products and solutions with reduction in price and a chance to market. It was started in 1989 to undertake item R& D outsourcing organization. Software Advancement & Services (~84% of revenue) and system incorporation (~16% of revenue) would be the main sections for the corporation. The software expansion & services segment can be further divided in three segments 1) Embedded merchandise design (EPD) 2) Professional design and 3) Visible Computing Lab. EPD, the greatest segment contributes 65-70% towards the top line where as System integration contributes 10-15%, accompanied by Industrial style (10%) and VCL (5-6%). Most of the main point here is offered by EPD segment where as VCL is usually loss producing. In terms of geography Europe & US will be the...