Tata Elxsi Ltd Q4 FY22 Earnings Conference Call Insights

Key highlights from Tata Elxsi Ltd (TATAELXSI) Q4 FY22 Earnings Concall

Q&A Highlights:

• Mayank Babla of Dalal & Broacha asked about time taken to make the fresher recruits billable. Manoj Raghavan MD answered that from a fresher’s perspective anywhere between 6-9 months is typically what the company takes to make freshers billable.

• Mayank Babla of Dalal & Broacha asked about the onsite offshore effort mix for 4Q22. Manoj Raghavan MD replied that it’s about 90:10.

• Mayank Babla of Dalal & Broacha asked if in April the company is planning a wage hike. Manoj Raghavan MD answered that the company have given a wage hike in January itself for all the junior people, around 70% of the workforce. The senior people will have the wage hike from April onwards.

• Bhavik Mehta with JP Morgan enquired about the impact of wage hike in 4Q22. Gaurav Bajaj CFO answered that on a quarterly basis, the impact of wage hike is about 150 basis point. However, that has been partially offset by the other operating lever present in the organization in terms of the utilizations and also helped by the better realization from fixed price projects and some rate hikes.

• Bhavik Mehta with JP Morgan asked that in FY23, what are the headwinds and tailwinds on the margin side. Gaurav Bajaj CFO answered that there are enough levers available for the company to manage its margins well in the range the company is operating today.

• Vimal Gohil from Union Mutual Fund enquired about the sustainability of the fixed priced projects. Gaurav Bajaj CFO answered that for the last few years the company has been operating in the range of 50:50 plus minus. And in the next 1-2 years that ratio is not going to change much, probably 2-3% plus minus.

• Vimal Gohil from Union Mutual Fund asked about the hiring slowdown in 4Q22 vs. previous quarters.  Manoj Raghavan MD replied that typically freshers come in, in 2Q and 3Q and that’s the reason for higher number in 2Q and 3Q. It has nothing to do with slowing down.

• Vimal Gohil from Union Mutual Fund also asked about the outlook for fresher additions for FY23 and the number for FY22. Manoj Raghavan MD said that the company is expecting to add between 2,500-3,000 freshers for FY23.  For FY22, the company added about 1,100 or so.

• Ankur Jain of Research India asked about TEngage’s response and any major deals have been signed. Nitin Pai CMO answered that the company did a global launch for it towards the end of March, so it’s too early to tell on the response. However, the company had a good response in US and is having multiple customer conversations there.

• Ankur Jain of Research India asked if the company is planning to launch its own operating system for the automobile division. Nitin Pai CMO answered that the company has no plans of any such launch.