Tata Group Stock In Focus: This Tata-Backed Dividend Paying IT Stock Posts Healthy Growth In Q3; Do You Own?

Tata Elxsi, a computer-software consulting firm of Tata Group, has reported healthy growth in Q3 earnings for FY24. The dividend-paying IT stock will be in focus on Wednesday. Tata Elxsi earned a net profit of Rs 206.4 crore in Q3FY24, registering a growth of 3.2% QoQ and 6% YoY. While revenue from operations stood at Rs 914.2 crore, up by 3.7% QoQ and 11.8% YoY.

In the quarter, operating revenue growth was over 3% sequentially, and on a constant-currency basis, the growth was over 9.4% YoY. Operating margin stood at 29.5%.

Manoj Raghavan, CEO and Managing Director, of Tata Elxsi, said, "We are happy to report a healthy performance in the third quarter with a top-line growth of 3.7% QoQ and 11.8% YoY in a challenging and weak quarter for the industry."

He added, "While we have continued to invest strongly in talent addition with over 350 Elxsians in this quarter and a net of 1,357 Elxsians over the past nine months, we have done well to maintain our EBITDA well over the 29% band. This underlines our strong focus on delivery and operational excellence, and our confidence in the future
and long-term demand for our differentiated offerings. Our employee engagement and talent retention strategies have contributed to attrition further improving to 12.9%."

Here is the segment-wise performance of Tata Elxsi in Q3FY24:

- Transportation growth at 2.7% QoQ, 15.6% YoY, aided by deal wins and ramp-up of Software Defined Vehicle (SDV) engagements.

- Healthcare growth at 4.6% QoQ, 13% YoY, driven by new product engineering and regulatory services.

- Media and Communications grew 0.6% QoQ and 3.4% YoY, performing creditably in an unfavourable environment for the entire media, telecom and technology industry.

- Industrial Design revenue grew strongly at 12.3% QoQ, leading with Design Digital.

- System Integration services grew 14.7% QoQ aided by some key deal wins and managed services.

Looking ahead, Raghavan said, "As we step into the last quarter of this financial year, the confidence of our customers in our differentiated Design Digital proposition and delivery excellence, and a strong deal pipeline provide us the foundation for sustained growth."

On BSE, Tata Elxsi's share price stood at Rs 8,193.65 apiece, down by 1.12% with a market cap of Rs 51,027.14 crore.

Tata Elxsi holds a consistent track record of paying dividends for the past five years. In 2023 alone, the company paid dividends up to 606% amounting to Rs 60.6 per share. This is higher compared to a dividend payout of 425% amounting to Rs 42.50 per share in 2022.

On the current market price, Tata Elxsi has a dividend yield of 0.74%.

Tata Elxsi is amongst the world's leading providers of design and technology services across industries including Automotive, Broadcast, Communications, Healthcare and Transportation.

The company is helping customers reimagine their products and services through design thinking and application
of digital technologies such as IoT (Internet of Things), Cloud, Mobility, Virtual Reality and Artificial Intelligence.