Thread by @BahlKanan

Tata Elxsi is down by 14% in 2 days 🥵

Even though the profits are 40% up YoY🫣

All this just because of ~6% drop in QoQ profits❓🤯

What to do❓ Read on👇 #TataElxsi

A. Financial performance

While revenue grew by 5.1% QoQ,

EBITDA dipped by 4.6%, PAT by 5.6%

And EBITDA Margins by over 3.1%

Mgmt has not re-assured about revival of margins yet

B. Is the fall justified?

There is hardly any dip in momentum of revenue growth

Margins and thus, profitability has dipped

But the consistent high margins over the last 2 years were the reason why market gave Elxsi a P/E of over 100 once

Now it is down to 66.2

C. What is a fair PE?

It is very difficult to say what is fair, but let us take 30x PE for long term estimates

If we expect a IRR of 15% over our investments,

Elxsi's earnings need to compound at 24.6% for next 10 years (>9 times)

D. Is this achievable?

I would say YES, given the mgmt capability and futuristic technology they work on

But Margins should stay stable for that

And you should be expecting a return of 15% IRR (not like 10x in 3 years)

Disc. Not investment advice

Want to learn about Fundamental Analysis in much more depth like this?

Use Coupon Code OCTOBER and join our membership 👇

learnpersonalfinance.in/s/store/course…

We conduct free live webinars on market updates

Last Friday we analysed IT Cos and their results

Join our free community today
learnpersonalfinance.in/s/store/course…

Subscribe to our Newsletter
learnpersonalfinance.substack.com