Both Tata Elxsi and Happiest Minds are in the Niche Business of providing Solutions & Services, for the Enterprise Digital Transformations and Next Gen Product & Platform Engineering through IoT (Internet of Things), Big Data Analytics, Cloud, Mobility, Virtual Reality, Cognitive Computing, and Artificial Intelligence (AI).

As by 2025, the enterprise digital spend is projected to be ~ 50% of the total technology spend, with the digital spending is expected to be growing at a healthy CAGR of 26.4% between 2021 to 2025, so there is a Strong Tailwind for both the companies given the diverse and differentiated multiple Industrial segments, both the companies caters to. Both has been growing at a faster growth rate, compared to other IT companies because of which both the companies have been enjoying PE multiples of over 50+.

Whether the Correction of more than 40% from the life time high MP, is a Buying Opportunity or is an Indicative of possible De-rating of the IT Sector itself (due to high anticipation of recession in developed economies like US and EU, from where both the companies gets their maximum revenue), we will come to know in this article. So, keep reading & keep enjoying the article.

Why & How will the Stocks of Tata Elxsi and Happiest Minds, make a comeback in FY (2023-24)?

So, How do they Edge over others? Answer lies in their Frontier technologies. 

Block chain, Robotics, IoT, Drones and AI has taken a generational leap and increasingly making their presence felt in the mainstream. For instance, the year gone by has seen a widespread adoption of block chain, not just by the financial services industry but also by the hospitals and pharmaceutical companies, that are leveraging it to safeguard critical information such as patient records and drug-formulation data.

Also, newer use cases have emerged due to the pandemic that has accelerated the growth in technologies like drones & AI.  For instance, using drones combined with computer vision & AI on low powered devices to create surveillance drones, that can monitor gathering of people in public places, traffic patterns etc.

A “digital first, remote first” mindset will help businesses transition smoothly towards an operate-from-anywhere work model. However, companies will need to build the right foundation to facilitate collaboration and productivity through cloud and edge infrastructure and automate processes, to support remote operations.

While operating from anywhere has become an inevitable reality, it requires most assets and devices to be located outside the traditional physical and logical security parameters which would take a heavy toll on an organization’s security team. With phishing attacks, data and identity theft on the rise, organizations must deploy a cyber-security model that retains the flexibility necessary to operate in the current conditions, while ensuring zero hindrance to the company’s growth and ensuring the highest standards of safety.

In addition, businesses that want to stay ahead of the curve will have to embrace hyper-automation in a major way, to not just take care of repeatable tasks but also use AI based automation to fundamentally redesign processes and drive-up efficiency. To implement hyper-automation, organizations should invest in the digitization of their artifacts and also ensure their business and IT process workflows across the functional areas, are digital.

In addition, businesses will have to embrace the distributed cloud model to reduce latency, network congestion and the risk of data loss, while ensuring compliance with privacy regulations that require certain sets of data to remain in a specific geography.This distributed cloud may include an on-premise public cloud, Internet of Things (IoT) edge cloud, and a 5G mobile edge cloud, with each offering distinct advantages while addressing various business and technological challenges.

Tata Elxsi and Happiest Minds are some of the examples of businesses which have truly differentiated themselves ahead of the pack, as they have been effectively providing an end-to-end experience consistently to their clientele, on the back of the digital ecosystem which they built to leverage these frontier technologies.

Tata Elxsi and Happiest Minds – The Growth Drivers & The Tailwind

Tata Elxsi – Designing “The Next”

It is a leading provider of design and technology services for product engineering and solutions across the industries. Tata Elxsi is an established name in technology consulting, new product design, development, verification and validation, and regulatory compliance services.

Tata Elxsi also provides solutions and services for emerging technologies such as IoT (Internet of Things), Big Data Analytics, Cloud, Mobility, Virtual Reality, Cognitive Computing, and Artificial Intelligence (AI).

With a firm foundation of IoT Platform; AI/ML Expertise; and Cloud Engineering, Tata Elxsi is poised to enhance the value delivered to its customers with new growth dimensions of Digital Twin Technology, DevOps, Connected & Personalized User Experience and Industry 4.0 digital transformation.

These new dimensions should help customers re-imagine and optimize their products and services, through design thinking and digital technologies; in single window interaction.

Tata Elxsi’s Product Wise Revenue Break Up:

1. 97.4% Revenue comes from Software Development & Services;

2. & 2.6% Revenue comes from System Integration & Support Services.

Similarly, in terms of Operating Profit (OP) Break Up:

1.98.9% OP comes from Software Development & Services;

2. & 1.1% OP comes from System Integration & Support Services (SIS).

(Source: https://www.tijorifinance.com/company/tata-elxsi-limited/#revenuemix)

Software Development & Services further divides into 2 Segments:

1. Embedded Product Design (EPD);

2. Industrial Design & Visualization.

Revenue through EPD Segment, comes through 3 Main Verticals:

1. Transportation;

2. Media & Communications;

3. & Healthcare and Medical Devices

“The Next” – In Automobiles & Transportation Industry

Tata Elxsi ability to provide complete product development support to OEMs and Tier 1 suppliers enables them, to offer exclusive software and engineering services for the automotive sector. Company run Centers of Excellence (CoE) in the areas of styling/ aesthetic design, Mechanical Design Engineering, embedded electronics, cloud software Engineering, and mobile-based applications.

Tata Elxsi’s customer engagements in the area of AI & Big Data Analytics for automotive broadly fall into the categories of productivity improvement, Intelligent triaging for anomaly detection & RCA analysis using AI & Big Data analytics, and design improvement through insights derived from drive chains, drivers, and occupants, and other sources of information to optimize cabin comfort, complement ADAS and other assist systems.

Tata Elxsi’s cloud-based Connected Vehicle Platform, powered by artificial intelligence has been deployed with Tata Motors and is live with over 120,000 vehicles and growing constantly. It has a rich range of features to enable tracking of the EV experience from Battery and Intelligent Charge management to live Range Polygons, that predict the range of the EV, taking into consideration geospatial and traffic features.

Looking at the global electrification trend in Automotive Industry, company have been able to set up a dedicated core team in the area of Electric mobility including the domain of EV charging infrastructure.From self-driving cars to video analytics solutions, it has a wide range of innovations enabled by AI and analytics. https://www.tataelxsi.com/insights/artificial-intelligence-for-an-automotive-future

The Artificial Intelligence Centre of Excellence (AI CoE) by Tata Elxsi, deals with the growing needs for intelligent systems. Its cloud-based integrated data analytics frameworks, with patent-pending technologies, enable customers to quickly implement and configure the landscape to obtain actionable insights and better results.

“Tata Elxsi has been a wonderful development partner, helping us to extend the software capabilities of the iDAR platform and integrate iDAR into a fully realized autonomous driving stack,” said Abhijit Thatte, VP of AI and software at AEye.

“Building a reference autonomous system from the ground up, based on iDAR as the artificial perception platform, is a fantastic achievement for the AEye and Tata Elxsi’s AD/ADAS team. We are excited to be demonstrating some of the unique capabilities of iDAR and how they can accelerate the deployment of autonomous features in vehicles.”

Tata Elxsi is accredited with Automotive SPICE Level 5 certification and is a member of leading consortium such as AUTOSAR and OPEN Alliance.

New features such as indirect vent control, motorized seat 3rd row access and cabin air cleaning were fully designed and integrated into the HVAC and Seat Zone software mainlines via activities ranging from AutoSAR Base Software configuration and application modelling to code generation and verification.

Tata Elxsi announced the licensing of its advanced autonomous vehicle middleware platform “AUTONOMAI” to one of the world’s top 5 automotive OEMs for their driverless car R & D. Tata Elxsi works with leading global automotive OEMs, suppliers, and chip vendors in system and software development, for the next generation of intelligent, autonomous, and electric vehicles.

This is complemented by a proven suite of software for classic and adaptive Autosar, ADAS, and autonomous software and tools for automated testing and validation (e.g. GAC Motor collaborated with Tata Elxsi to develop Smart Gateway Module).

Braking & Chassis Sub Systems: Tata Elxsi was involved in the complete functionality testing of various braking & chassis subsystems like Anti-locking Braking system (ABS), Electronic Stability Program (ESP), the Traction Control system (TCS), Hill Ascent Control (HSC), and Hill Descent Control (HDC). The software logic of these individual subsystems was tested in a HILS environment.

Some of the niche areas where Tata Elxsi has been working successfully recently in this verticals, are as following:

1. Low Latency High Performance ADAS Solution

2. Body Control Module:  Functional Tester of Body Control Module for a Heavy Commercial vehicle. The Body control module is the primary module in the vehicle’s electrical system.This module provides power distribution and circuit protection to other units in the vehicle, monitors sensors and switches and drives output loads by means of FET’s or switched relay loads.

3.CI/CD Platform for Connected Vehicle Program

4. Bangalore & Mumbai Metro – Way Finding Information Design.

5. Driver’s Behaviour Monitoring System

6. Connected Vehicle Platform For Tata Motors.

7.Heating Ventilation and Air Conditioning HILS.

8. Adaptive Front Lighting System.

9. Automatic Transmission Control – REVERSE ENGINEERING

10. Geolocation and obstacle detection.

11. Autonomous Mining Vehicle Remote Control Station.

12. Next Generation Telematics Application Development for Off-Road Vehicle.

13. EV Power Density Solution – Integrated DCDC and ON Board Charger.

14. Remote Control and Monitoring App for Unmanned Vehicles.

15. Intelligent Rail Systems

16. Saloon Interior Design Cutting-edge ergonomics for improved customer experience.

17. Integrated Platform Solution with Tata Elxsi’s Driver Monitoring System.

18. Customizable CLOUD-Based Global Regulatory Intelligence Platform.

19. Excavator Cabin Displays – UI Design and Development.

“The Next” – In Broadcast, Media, and Telecommunications Industry

Tata Elxsi helps to the streaming industry to formulate a QoE Test strategy, deliver better streaming products and user experience through FalconEye.

End-user Environment simulation, automated multi-device QoE testing, and enhanced NFR KPIs are the critical pillars of empathetic testing, to improve customer experience.

Tata Elxsi works with leading MSOs, content providers and studios to develop innovative services and applications, that create subscriber stickiness and drive revenue growth.

This is backed by over 25 years of design and engineering experience and deep specialization in video and OTT engineering and service delivery, a global delivery presence, and offshore development centers in India.

TEPlay is an all-in-one platform that relies on fully integrated technological building blocks, thus accelerating the launch of a next-generation OTT platform for Content Owners.Some of the niche areas

It offers SaaS-based preintegrated OTT Backend components (CMS, SMS, OTT Middleware, Usage Analytics, Content Discovery, UI Composer, Ad Tech Solutions, White labelled Apps) for faster deployment of OTT Services. TEPlay is backed with powerful analytics to improve engagement and make content more discoverable.

Some of the niche areas where Tata Elxsi has been working successfully recently in this verticals, are as following:

1.Transformation for Media Sales Ad Platform and Operations Optimization:

• Tata Elxsi performed consultancy services for creating a Business Case for AI driven Ad Sales Platform and a longer term roadmap for creating a monetization eco-system.

• Consultancy Practice works with clients in strategy development, for transformation and performance improvement, covering workflow, technology, people and processes.

• Development and deployment of AdTech solution and systems for digital transformation and operation optimization.

2. “Tata Elxsi has been a valuable partner in our latest innovation – Internet TV. Their engineering and integration expertise in the OTT segment has helped us in building a world class product.”, Sunil Taldar, CEO – Airtel Digital TV

3. Media Pipeline Enablement For Surveillance Camera Supporting SPIKING NEURAL NETWORK (G-streamer plugins for AI based High-end camera for Casino Surveillance)

4. TATA SKY STB Design: Tata Sky engaged with Tata Elxsi for an end-to-end solution right from design, development, & integration of key components for its media STB. The whole development process was done in an integrated product design approach of industrial design, engineering functionality and product software implementation.

5. NEURAL NETWORK Based Speech/ Audio Recognition on EDGE Device.

6. System Integration for high speed broadband services.

7. 5G test bed implementation with Service, Network Orchestration using Tata Elxsi’s Orchestrator (TEOSM) and 5G slicing from Core to RAN for mMTC, URLLC, eMBB.

8. Mobile core & Broadband Use case implementation for Operational Transformation.

9. India’s First Hybrid DTH set-top box powered by Android TV – “Enhancing Smart TV viewing experience with intuitive UX, integrated with voice assistant”.

10. Hyper-Personalization Using Content Discovery –

Content discovery of the ‘future’

To offer the best user experience, service providers need to improve their content discovery mechanism and extend hyper-personalization. The idealized platform will deploy AI, machine learning and predictive analysis to understand every piece of content to learn more about the viewing pattern, offering contextually relevant experiences with more personalized suggestions. This would also help in segmenting the audience for targeted content discovery and advertisement.

With the integration of voice, the most exciting element is the ability to detect the intent of viewers. Suggesting movies or shows that viewers would be highly interested in based on voice tone and emotional state would be a game changer for any content discovery platform, which would include:

• Personal assistant
• Interactive & UX enhanced mobile applications
• Contextual content discovery
• Powerful universal search

Tata Elxsi’s Centre of Excellence (CoE) has built a platform to accelerate deployments targeting higher levels of personalization and quicker content discovery.

Tata Elxsi’s Content Discovery Platform:

Content discovery platform is a versatile, intelligent video analytics solution with image tagging as its core feature. It aims to offer insights to improve customer experience and generate newer avenues of monetization. Highlights generation, immersive and targeted advertising, closed caption creation for the hearing impaired audience, interactive gaming analytics, content performance (interest, emotion, attentiveness, demography) are some the prominent features to improve the overall user experience. The platform enables contextual commerce on TVs.

Today the critical point for operators to be relevant is to offer hyper-personalized content with near-zero time for content discovery.

Having a platform that uses AI to give viewers the ability to search, discover and quickly view hyper-personalized content will determine success for OTT operators.

11. Technology Services & Solutions for the Broadcast Industry:-

i) – Globally Deployable RDK Suite – Prime

ii) – FalconEye Test Automation & QoE Monitoring

iii) – Artificial Intelligence & Big Data Analytics

iv) – DevOps

v) – IoT Platform

vi) – Connected TV & Multi-Screen Application.

“The Next” – In Healthcare & Medical Devices Industry

Tata Elxsi’s Digital Health Platform (DHP) is a “Digital Front Door” to all essential telehealth services. It is a highly customizable platform with configurable features and support for a variety of third-party tools. It allows for a seamless user experience by virtualizing major patient touch-points, across the patient journey. It is easily integrable and interoperable with any standard hospital infrastructure and workflow, along with interfacing with patient side devices and applications for better clinical outcomes.

With 15+ years of experience in catering to healthcare & life sciences companies, Tata Elxsi has built a strong services and solutions portfolio, that adds value at every stage of the customer’s product development lifecycle. Company offer end-to-end regulatory service portfolio for global pharma companies to help them increase agility and lower operational costs, while ensuring compliance with ever-changing global industry standards and requirements.

In the future, telemedicine is expected to evolve into healthcare through IoT devices, including personal digital assistants and wireless infrastructure. Opportunities for business are ➔ Partner with data unification platforms that integrate longitudinal patient data from multiple sources into one cohesive patient history ➔ Develop personal diagnosis equipments to supplement patients’ at home digital consultations ➔ Provide advanced data tracking in healthcare wearables, as consumers are now open to sharing more data for personal benefit.

Internet of Medical Things (IoMT) and Artificial Intelligence (AI) have opened up a world of possibilities to transform healthcare access providing companies, doctors and patients with new insights and analytics to enable better decision making and have a competitive advantage. Therefore, Speed to market is quite important and Tata Elxsi has been working on this demand to give consumers the care and control of their health with remote monitoring systems.

The Healthcare software market is growing at a significant rate, as more and more services and operations are being virtualized. As Healthcare is one of the highest regulated industries, healthcare software testing needs to be comprehensive and thorough, to ensure a secure and seamless user experience.

The top 5 trends in Healthcare Software Testing are:

Some of the niche areas where Tata Elxsi has been working successfully recently in this verticals, are as following:

1. Test Automation of Urology Application.

2. Achieved 25% BOM cost reduction through Holistic Value Engineering of Blood Coagulation Analyzer.

3. Development of algorithms to automate the detection of lesions.

4. Fixed Dose Pen Safe and cost-effective dose delivery pen for convenient self-injection.

5. Hip Joint Implant Design Improvement Feasible, Optimized Complex Surface features through CAE & Additive Manufacturing.

6. Re-Engineering LASER-Based LITHOTRIPSY Device for Performance & Ease of Use.

7. Global Engineering Center for Aesculap.

“The Next” – In Consumer Home Appliances, FMCG and Education Industry

As our homes continue to be our multiverse, there will be faster adoption of smart home technology. So, Opportunities for business are ➔ Standardize home appliances to enable inter-connectivity between individual devices to create seamless, ‘Whole-of-house’ smart systems ➔ Expand the urban portfolio of home products and services as reversing migration is increasing, altering purchase decisions of Indian smaller towns ➔ Design adaptable layouts and multi-functional products for homes that serve more functions and cater to diverse needs of the family members.

Also, Tata Elxsi expects digital learning to evolve into the flipped classroom model. So, Opportunities for business are ➔ Transform the one-size-fits-all approach to education and provide content that is tailored to each student’s abilities and needs ➔ Redefine education’s three Rs – Reading, Writing, and Arithmetic to include Rethink, to enable the shift from a teaching culture to a learning culture ➔ Encourage collaborative projects between organizations and schools that develop skills like adaptability, problem-solving, resilience, communication and emotional intelligence in students.

The global education technology market size is anticipated to reach USD 285.2 billion by 2027 and some of the niche areas on which Tata Elxsi is working are:

(i) – Data-Driven Hyper-Personalization;

(ii) – Dynamic Adaptive learning;

(iii) – Automated Content Management;

(iv) – Immersive Data Visualization.

EdTech: Driving Personalized and Customized Learning Experiences ➔ 4Es (EdTech, Edu-Content, E-Learning and Entrepreneurship) that will drive growth in the overall education sector. Each one of this “E” s is equally important for the required innovation in technology, content, delivery, and business models to drive digital transformation in education.

AI Engine on EDGE Platform – Smart Home Application: AI based Gesture detection, User Posture recognition, Sound Analytics, Expression detection, Footstep detection etc. Optimization and simplification of AI inference engines retaining the accuracy.

Some of the niche areas where Tata Elxsi has been working successfully recently in this verticals, are as following:

1. Microwave oven which recognize the food ingredients.

2. Hindware Water Purifier Design Key Challenge: Creating aesthetic design difference, through product styling.

3. Smart Refrigerator Application: Key Challenge is to design an intuitive mobile app, to experience the full potential of an intelligent smart Refrigerator.

4. Protinex – Helping the brand to expand in the health-food-drinks category:

i) – Brand Strategy

ii) – Brand Identity Design

iii) – Packaging Graphics

5. Orient Electric Tower Cooler Design with IoT Features and Orient Aerostorm Fan.

6. Sunny Lite Jar: Making edible oil usage for daily use smart, easy and ergonomic – Tata Elxsi team came up with a revolutionary design solution – ‘No Spill, Easy Fill’ tap jar.

7. Clinic Plus: Strong and Long Health Shampoo – Tata Elxsi objective was to create a revitalized brand pack to appeal to the global market as it has not been redesigned over few years.

8. Gowardhan Ghee: Bringing out heritage values of ghee – Tata Elxsi’s task was to rejuvenate the packaging while continuing to associate it with the traditional sentiments and heritage values associated with ghee.

9. Bru Exotica: Entering a premium segment – Tata Elxsi was engaged as the packaging design partner for HUL’s premium coffee range Bru Exotica and Bru Gold. The challenge was to uplift the traditional imagery of the brand and give it an international appeal.

10. IoT Smart Gas Stove Design – A premium IoT gas stove solution for Indian millennial, addressing cooking and home safety needs.

11. Panasonic Appliances: Intelligent & Sustainable Appliances for the Future

“The Next” – In Industrial Design & Visualization and Manufacturing Industry

INDUSTRY 4.0 AND THE FUTURE OF MANUFACTURING:

Industry 4.0 is here to boost manufacturing and engineering to new levels. The pandemic has only accelerated Industry 4.0 initiatives in the manufacturing sector. Business agility underpinned by systematic technology adoption will be critical for companies in the new normal.

As manufacturing leaders focus on building operational resilience post the pandemic, in this whitepaper know more about:

a) – Sweeping trends that will impact the manufacturing sector.

b) – How by implementing emerging technologies like IIoT, Artificial Intelligence, Machine Learning, Tracking and Traceability, AR and VR can help companies stay relevant.

c) – Changes organizations must embrace to drive a long-standing competitive advantage.

EDGE AI FOR PREDICTIVE ANALYSIS – INDUSTRIAL AUTOMATION:

Some of the examples are –

i) – Analysis of Conveyor Belt Operation.

ii) – Robotic Gear Movement – Using rotary vibration history data for predicting abnormal and normal gear operations.

iii) – Implementing Predict Failure and triggering Schedule maintenance.

Production optimization using Digital Twins:

There are 3 types of digital twins:

i) – Product twins

ii) – Production twins, and

iii) – Performance twins.

A digital twin is a digital model that manages all of the geometry and product attributes. It is used in the creation and modification of a product. This is the most common type of digital twin that is used today and has been used for a long time in the form of CAD and CAE software such as – CATIA, ANSYS, and others.

The other type is the Production Digital Twin – This is an established domain, and we’ve seen a wide range of simulation tools that assist manufacturers in planning, managing, and optimizing their operations in this space. And now, companies can capture actual production data and use it to drive and validate simulations, as well as continuously refine the production, thanks to IIoT and industry 4.0 practices.

Finally, there is the Performance Digital Twin – which is now being used in very subtle ways because it is a logical extension to include product reliability data, quality data, and functional data as it is captured in services. The technology exists to monitor many products in service via Industrial Internet of Things (IIoT) strategies, but companies need to capture and then act upon this data.​

Using digital twins, we can simulate the entire network, from material arrival from suppliers to how it is transported within the plant and to the stores, as well as the stores’ production line and production line to final delivery. These simulations can be used for both greenfield and brownfield projects. This can be done during both the planning and execution phases.

Some of the niche areas where Tata Elxsi has been working successfully recently in this verticals, are as following:

1. Redefining passenger travel experience @ Terminal 2 Chhatrapati Shivaji International Airport (CSIA) – Mumbai.

2. Built a framework to predict problematic cable system interfaces for a European cable operator.

3. Castrol Magnetec – Bridge: Consumer Research & Design Strategy – Industrial Design – Packaging Design & Product Animation.

4. Tata Brabo – Industrial Design for the 1st ‘Made in India’ robot.

5. Mixed Signal SoC design for Bio-metric Finger Print authentication.

6. NuttX RTOS for Robotic Applications.

7. Traceability, Process, Asset, and Production Monitoring Solution.

8. Immersive Training for a manufacturing unit and MR – based Maintenance, Repair, and Overhauling Training for Maintenance staff @ Leading Steel Manufacturer.

Tata Elxsi – What is Driving “The Next”?

According to NASSCOM, India’s contribution to the global ER & D market is predicted to increase from US$ 31 Billion in 2019 to US$ 63 Billion by 2025, at a CAGR of 12-13%. Of this, it is expected that Indian ER & D service provider’s market would be witnessing at an impressive CAGR of around 17%.

In addition, Zinnov and JP Morgan estimates that the Indian ER&D offshoring market is expected to increase from US$ 36 Billion in 2020-21 to US$ 117 Billion in 2030-31. Correspondingly, the share of Indian ER & D service providers is expected to increase from US$ 16 Billion in 2020- 21 to US$ 58 Billion in 2030-31.This corresponds to more than 13% CAGR for the 10-year period.

Tata Elxsi provides various ER&D services for Transportation, Media & Broadcasting and Healthcare verticals, which is getting these benefits from the current up-cycle in ER & D spend.

Further, in order to establish itself as a niche player in advanced technologies, with the ability to scale and build efficiencies, company has expanded its portfolio of patents and IP solutions across the industry segments. Elxsi’s investments in IPs such as TEPlay, FalconEye, iCX, QoEtient, and Autonomai testify to its strong focus on delivering digital engineering-led transformation for its clientele.

Growth Drivers across “The Next” Verticals

1. Automotive Industry – According to Deloitte, the global demand for new electric vehicles (EVs) is expected to grow from 2.5 Million units in 2020 to 31.1 Million by 2030.

It is expected that in subsequent years there would be increasing proliferation of Digital & Predictive technologies in the automotive sector. This would be driven by maturing of ML/AI, and would help fulfill consumer expectations for personalized and enhanced experience. VR technology is already offering virtual showroom tours, test drives, and 360° views of vehicle interiors for an immersive experience.

To make most out of these trends, Tata Elxsi has built strong capabilities in providing services and solutions for CASE mega trends in the automotive industry – Connected, Autonomous, Shared and Electric.

2. Media, Broadcast, and Communication – According to Grand View Research, the global telecom services market is estimated to grow at a CAGR of 5.4% from 2021 to 2028.

Drivers for this market expansion includes – increasing demand for high-speed connectivity, explosive growth in consumer generated multimedia content for OTT applications, and growing number of mobile users.

The OTT market is currently valued at US$ 44.5 Billion and is expected to reach US$ 139 Billion in 2028, with a CAGR of 17.7%. With better cloud streaming services, and production companies opting for online streaming channels over traditional broadcasting, the market is likely to drive investments in OTT and software-based network architecture, for managing high traffic and network loads.

Tata Elxsi has a very strong presence in this vertical by virtue of its time-tested engagements with leading broadcast and cable companies. The Company has products and services across the value chain helping its customers to offer services with enhanced experience, distribution and delivery with better QoS, and ad monetization.

3. Healthcare and Medical Devices – The digital health market itself is expected to grow to more than US$ 400 Billion by 2025.

Tata Elxsi’s TEngage is a scalable, cloud-first digital health platform for Omni-channel care that allows hospitals and healthcare providers to offer multi-modal touchpoints throughout the patient journey. TEDREG, a yet another innovation of Tata Elxsi, is a regulatory intelligence platform which provides actionable insights to the manufacturers, for new market launches and product sustenance.

Impact of the Growth Drivers on “The Next” Business Divisions

1. Software Development & Services – The Growth was broad based across all the 4 segments under this division, which are transportation, media and broadcast, healthcare and industrial design, as the Revenue has grown at 35.9% in this division during FY (2021-22).

NASSCOM, under Engineering and Innovation Excellence Awards 2021, recognised Tata Elxsi in the following three categories:

i) – Transportation – This vertical posted strong growth of 29% YoY, generating Rs. 887 crores which is 36% of Tata Elxsi’s operating revenue. This growth was a result of company’s diversified business outlook with focus on adjacencies in the off-road and rail industries, accelerated customer acquisition, and diversification strategies to de-risk revenue dependency from customers, segments, and regions.

In the passenger car and commercial vehicle segments, the growth was secular across autonomous and connected technologies, infotainment, connectivity and security and electric vehicle platforms with both OEMs and the suppliers.

Company’s automotive engineering business is well poised to address the emerging opportunities from the ecosystem transformation in the sector, allowing it to actively engage with its customers to drive projects around Autonomous Driving (AD), ADAS (Advanced Driver Assistance Systems), electrification projects and digitalisation.

The Company is actively engaged with leading car manufacturers and suppliers to design and develop software and solutions for power-train, infotainment, AD (Autonomous Driving) and ADAS (Advanced Driver Assistance Systems) and other related areas.

Tata Elxsi was awarded a ‘Design Digital’ deal by a leading Japanese OEM, for the development of next-gen HMI for infotainment and in-cockpit interface for their range of vehicles.

Company’s efforts to expand in to adjacencies are also showing good results. During the year, Tata Elxsi was selected by a world-leading systems supplier for development of autonomous driving platform for commercial vehicles.

The Company also has invested in developing a leading Connected Vehicle Platform (CVP) called Tether. It is a cloud-based Internet of Things (IoT) data platform that enables automotive customers to offer a range of customer-centric and digitally enhanced features. CVP provides off-the-shelf dashboards for insights and actions for vehicle maintenance, accurate real-time vehicle location tracking, driver behavior monitoring, navigation, electric vehicle battery management, and fleet management etc.

ii) – Media, Broadcast, and Communications – This vertical accounted for 39% of Tata Elxsi’s operating revenues & has grown at 32% on YoY basis.

Broadcasters and operators are now integrating capabilities like OTT platforms, connected devices, Artificial Intelligence (AI), and analytics to meet consumers changing needs.

Tata Elxsi has been selected as the platform provider and system integrator for a multi-region Android TV launch, by a leading US based operator.

Besides that, company was also selected to deploy iCX – it’s SaaS – based customer experience platform, for a leading global telecom operator across the multiple countries.

Company’s flagship product for proactive video quality of experience (QoE) improvement – QoEtient, has won the OTT TV Technology of the Year Award, at the renowned VideoTech Innovation Awards 2021.

iii) – Healthcare & Medical Devices – The healthcare segment contributed 12.5% to total revenues and grew by 72% compared to (2020-21).

More and more digital features are being added to devices that have already been approved, authorized, or cleared by the FDA.

Also, highly competitive marketplaces and dynamic business environment are pushing medical device, pharmaceutical, and healthcare industries to expedite their adoption of digital technologies. Tata Elxsi’ unique capabilities in design led engineering has helped several global enterprises enhance productivity by streamlining existing operations and generating new revenue streams.

iv) – Industrial Design & Visualization (IDV) – IDV helps Tata Elxsi in creating traction through design led deals, which has a multiplier effect on winning deals for above three verticals.

The revenue of IDV grew by 36% from (2020-21) and this revenue growth was driven by the strategic design-led digital deal wins for the Company.

2. System Integration and Support – The Company provides system integration and support services for specialized applications, including experience centres, training and safety, and design visualisation and offer solutions and services for – cloud and infrastructure management, virtual reality (VR), and 3D printing.

System integration combines design, technology, and content to assist corporate brands in building experience centres to enhance communication about their business impact and brand with the customers, stakeholders and the community.

Revenue generated through system integration had a growth of 18% on YoY basis.

Happiest Minds – Creating Digital Capital, Through Agile Eco-System

Happiest Minds is a next-generation digital transformation, infrastructure, security and product engineering services company which delivers end-to-end futuristic and transformative digital solutions to some of the world’s biggest corporates, enabling them to build a competitive edge and win.

With its end-to-end capabilities across the digital lifecycle, innovation prowess and strong team, company is positioned to rapidly deliver strategically viable, futuristic and transformative digital solutions. This is complemented by company’s diversified business model, which provides scalability across the verticals, technologies, customers and geographies.

With its Digital and Agile Delivery Model, company focuses on delivering a seamless digital experience, enabling them to fulfill customers’ business requirements. This is supported by their agile framework, which enables scaling right from ideation to production in the shortest time. Hence, the company claims itself to be a 97% Digital and 93% Agile business.

Born Digital, Born Agile – “Designed For Perpetuity“

The Happiest Minds’ model for creating an institution which will survive in perpetuity is unique. The tamper-proof legal framework, the Executive Board structure, being on the leading edge of technology, and the enduring belief and commitment of the leadership, will enable its success.

Company foresees that enterprises will have 3 strategic imperatives to focus on – Growth, Digitization and Efficiency:

1. Growth – Leveraging technology trends to maximize value and create IT force multipliers, to win business and market share by:

a) – Enhanced People Engagement.

b) – Enhanced Customer Engagement.

c) – Implementing self-managing physical or software systems that learn from their environments and can dynamically modify their own algorithms to adapt to the new conditions in the field like humans.

d) – Developing systems and applications that learn about objects or content by analyzing their data and using it for creating realistic, original, and brand-new artefacts.

2. Digitization – IT and business staff as a team-in-fusion collaborate and drive innovation to rapidly digitize business by:

a) – Composable application architecture which allows implementing new features up to 80% faster which reduces risk of losing market momentum and customer loyalty significantly.

b) – Implementing Decision Intelligence architecture to understand and engineer how decisions are made.

c) – Rapidly identifying, vetting, and automating as many processes as possible.

d) – An integrated approach for operationalizing AI models to generate 3 times more value from AI efforts.

3. Efficiency – Digital business requires a resilient and efficient IT foundation as its core, to scale cost-efficiently & to engineer trust:

a) – Resilient and flexible integration of data across business users and platforms to simplify the data integration infrastructure and minimize technical debt.

b) – Assets and users can be anywhere, meaning the traditional security perimeter is gone making a strong case for ring fencing security around data, privacy, and safety.

Vision DELiGHT (2021-31) to achieve “Perpetuity”

The industrialization-of digital theme that had gathered steam earlier, was accentuated by the pandemic. Adapting to digital realities thus became an imperative. Technology was no longer just a cost of doing business; it became a source of advantage. Happiest Minds as a “Born Digital – Born Agile” Company was fortuitous to be at the intersection of (technology + digital) and is favourably positioned to serve the customers, who are willing for this migration.As such Demand for company’s services was robust & this is reflected in its growth, revenues and the profits.

Company aims to achieve target Growth of 20% CAGR, over the next five years and after that, at 1.5 times the industry growth. Acquisitions will be a key part to achieve this growth trajectory and as such company not only continues to build on to their IP’s and solution accelerators assets, but is also making ahead-of-time investments in emerging technologies such as Metaverse, Web3.0, Advanced Analytics etc. to ensure that it is ready when their customers will adopt to these technologies.

The Opportunities for Growth:

1. Next-Generation Cyber security services and low code/no code application development services are two areas, where company have seen increased traction and demand.

2. Cloud adoption is still under-penetrated, with about only 30% of workload on the cloud and the core transformation, which is a multi-year journey, has still a long way to go.

Company’s organic growth has been very healthy and to ensure its inorganic growth, company will continue to focus on – strengthening its offerings, entry into a new geography or strengthening an existing geography, so as to get in-depth focus in a vertical.

Company have built a presence and established its competencies in strategic locations and will continue to leverage their technology expertise and offshoring capabilities, to position themselves as an attractive digital transformation partner.

Business Growth Drivers to achieve “Vision DELiGHT & Perpetuity”

Company Operates in Diversified Business, under 3 Divisions/Units:

i) – Product Engineering Services (PES) – Engineering digital products that are smart, secure and connected: Provides services to companies, to transform their own products or do the same for their customers.
Includes Big data, mobility, DevOps, embedded design services, product testing, Microsoft services. PES constitutes ~ 47% in the Total Revenue of the company.

ii) – Digital Business Services (DBS) – Helps organizations develop a digital roadmap to create digital capital and a seamless customer experience: Provides services to digitize the company’s operations related to customer-centric activities.
It includes Digital content broker (for asset management), proximity marketing, digital customer on boarding, digital query assistant. DBS constitutes ~ 29.7% in the Total Revenue of the company.

iii) – Infrastructure Management & Security Services (IMSS) – Offers end-to-end monitoring and management and secure ring-fencing of customers’ infrastructure and applications: Provides services to manage an Enterprise’s distributed and Hybrid IT environment.
It includes service desk, data centers, public clouds, applications, network, end-user services, and support levels. IMSS constitutes ~ 21.9% in the Total Revenue of the company.

In FY (2021-22) Digital Business Services (DBS) led the growth with 53.3%, followed by Infrastructure Management and Security Services (IMSS) at 45.4% and Product Engineering Services (PES) at 31%. The 3 Centers of Excellence (CoE) then (now there are 4) delivered excellent performance, with all of them contributing to revenues of more than 50%.

Source: (https://www.bseindia.com/bseplus/AnnualReport/543227/73129543227.pdf and https://www.screener.in/company/HAPPSTMNDS/)

Company’s Strengths – “Broad range of offerings and multiple business units (BUs) facilitating upsell and cross-sell opportunities”

1. Strong R&D Capabilities and Technology Expertise –

i) – Capabilities to develop solutions as per the new technological breakthroughs.

ii) – Expertise on the Internet of Things (IoT), DevOps and Robotic Process Automation (RPA), Software Defined Networking/Network Function Virtualization (SDN/NFV), Big Data and Advanced Analytics, Blockchain, Cloud, Business Process Management (BPM) & Security.

iii) – Expertise in technological capabilities developed to support mobile connectivity with other devices, social media, big data analytics and cloud delivery, among others.

iv) – Enterprise digital transformation, next-generation product and platform engineering and secure infrastructure delivery capabilities.

v) – 4 Centers of Excellence (CoEs) for IoT, Analytics/Artificial Intelligence and Digital Process Automation.

2. Top-Rated Clientele and Diversified Revenue Concentration – 54 Fortune 2000 / Forbes 200 Billion $ Corporation, out of whom 85% are Repeat Business.

3. Diversified Geographic Footprint – Presence across 7 countries, including the US and the UK, which are the largest IT markets, with deep offshoring capabilities which provide scalability as India has availability of large pool of trained engineers. Further, diversified operations across the geographies, ensures lower market concentration risks.

4. Strong Sales & Marketing Effort – Focused sales & marketing strategy, seeking to increase revenues from new and the existing customers.

5. Shareholders & Investor Friendly Promoters with High Corporate Governance Standards – To know more about the importance of Shareholders Friendly Promoters and of Corporate Governance, read – https://jyadareturn.com/7-key-parameters-you-should-look-for/

6. Risk Management Framework – Company have established a well-defined framework and procedures for enterprise risk management, prepared under the supervision of the Executive Board. It encompasses significant risk in areas of information security, operations, delivery, and key support functions along with detailed risk management guidelines including risk identification, analysis, response, tracking, and management discussion and mitigation.

Risk registries are maintained by respective functions and project teams. These are centrally reviewed and periodically monitored by compliance and governance teams identified as the owner for the specific area of risk.

Tailwinds to Drive the Growth –

i) – Global IT is expected to grow at a CAGR of 7.3% (FY21-25) with Digital IT spend expected to grow at 26.4%.

ii) – By 2025, the enterprise digital spend is projected to be ~50% of the total technology spend with the digital spending growing at a healthy CAGR of 26.4% between 2021 to 2025.

iii) – Growing Global technology spend in verticals such as Healthcare – 21.9%4 , Edutech – 20.1%4 and Media – 9.9%.

iv) – The global PES market is expected to grow at a CAGR of 6.7% between 2021 and 2025, the IMSS market is expected to grow at a CAGR of 10.3% between 2021 and 2025.

v) – Organizations are making significant progress to boost performance and efficiency, optimize processes, and improve security thanks to AI and ML.

vi) – US and Canada are the largest source of IT export revenue in 2020–21, at USD 58.0 bn, second-largest being the Europe region (excluding UK), with a market share of ~15.7%. To know more about Tailwinds in the IT & Disruption Technology Sector, read – https://jyadareturn.com/why-ltimindtree-could-be-the-multibagger-story-for-the-next-decade/

Tata Elxsi and Happiest Minds – The Unmatchable Growth Trend

For Tata Elxsi – Revenue from the sales has grown more than 4X between (2013 to 2022) whereas Operating Profit, PAT, and CFO has Grown more than 11X, 26X, and 13X respectively, during the same period. This means that, between (2013-22) Elxsi’s Sales has grown at a CAGR of 17%, whereas its PAT has grown at a CAGR of 44% and that while doing so, company’s OPM on average has remained ~ 25% .

This is Just a Phenomenal Growth & is just unmatchable, when compared with any of its peers, for that long period of reference for comparison.

Tata Elxsi continue to perform extra-ordinarily well in FY (2022-23), which can easily be seen by its some of the Financial Highlights for Q2FY23:

i) – Revenues from the operations has grown by + 5.1% QoQ & + 28.2% YoY, whereas OPM & NPM (PBT) were at 29.7% & 28% respectively. PAT has grown by 39.1% YoY.

Segment Wise –

1. Transportation continues to grow strongly, registering a revenue growth of 3.8% QoQ, and 30.4% YoY, aided by large deal wins across EV, autonomous and adjacent segments. Strong growth in Europe offset by currency headwinds.
2. Media and Communications delivers sustainable growth of 2.1% QoQ and 22.2% YoY, powered by continued growth in key accounts and entry into new operator accounts with platform-led deals.
3. Healthcare continues to grow strongly with new product engineering and regulatory services, reporting 8.2% QoQ and 55.9% YoY growth in revenues.
4. The Design business (IDV) continues to grow strongly fueled by strategic design-led digital deals reporting 13.5% QoQ growth in revenues.

For Happiest Minds – From making an Operating Loss of (-) Rs. 51 Crore in 2013 to Making an Operating Profit of Rs. 295 Crore in TTM, Company has increased its Sales more than 17X between (2013-2022).

Company’s sales has grown at CAGR of 35% during this period, whereas its PAT has grown consistently after 2018, at CAGR of 113%, with consistently increasing OPM from 9% in 2013 to 25% during TTM.

Across the Customer Industry Group – Company has seen Revenue Growth rate of ~ 23% in Edutech; ~ (16% to 18%) in Hitech; ~ 14% in BFSI; and ~ 13% in Travel, Media, & Entertainment (TME) in last 8 quarters. These 4 verticals together constitute ~ 67% (i.e. 2/3^rd) of the Total Revenue which the company earns.

Remaining 4 verticals namely – Retail/CPG, Industrial, Manufacturing, and others are growing ~ 10%, ~ 8%, 10%, and 6.5% respectively in last 8 quarters. These remaining 4 vertical together constitute 1/3^rd of the company’s revenue.

Similarly, across the Digital Service Offerings – Digital Infrastructure/Cloud is growing at ~ + 45%; SaaS at ~ + 21%; Security Solutions and Analytics/AI both at ~ + 12%; and IoT at ~ 6%.

Revenue Break-Up across the BUs – Revenue from IMSS has remained in the range ~ (21.5% to 22.5%) in last 8 quarters, whereas that from DBS and PES has been in the range (27% to 30%) and (46.2% to 49%) respectively.

Deep And Entrenched Client Relationships: Focus on building & sustaining long term relationships has contributed to growing revenue from existing customers driven by digital technologies and agile delivery methodology.

Competitive Landscape – In FY22, Happiest Minds reported a revenue growth of 41.4% (INR, Y-o-Y) and an EBITDA margin of 26.1%.On Revenue growth + EBITDA margin basis, Happiest Minds is in Cluster 1 among its peer.

Key Strategies Company have been focusing on:

Well-Executed Inorganic Growth Strategy – M&A Alignment – Guidelines:

i) – Pure play digital services companies – Managed Services, App modernization, Engineering Services, Cloud Services.

ii) – Assets which strengthen our geographical presence in US, Europe, Middle East and ANZ.

iii) – Enhance the length and breadth of our technology offerings – Low Code / No Code, Salesforce, Security Services.

iv) – Enhance vertical focus especially in BFSI, Healthcare & Life Sciences.

v) – Enhance partnerships and strategic alliances – Microsoft, Outsystems, ServiceNow.

vi) – Scalable customers, profitable and has shown growth.

vii) – Assets with certain revenue threshold.

Tata Elxsi and Happiest Minds – The Verdict on Growth Prospects in FY (2023-24) & Beyond.

Technology advancements in fields like Artificial Intelligence, Cloud Computing, Blockchain, and Automation have emerged as the fundamental pillars, driving the global digital transformation. The increased acceptance from the sectors like banking, financial services and insurance, healthcare, consumer packaged goods, and telecommunications, as well as organisations that are looking to the future and seeking out newer methods to transform their business operations to provide superior customer experience, is what causing the surge in the adoption of these disruptive technologies,

According to BCG’s survey, a majority of businesses across 13 countries plan to increase their spending on digital transformation in 2023 vs 2022. The top 2 areas for future investments are business model transformation and sustainability, with respondents expressing concern over the uncertain return on investment from digital transformation initiatives.

“Despite economic headwinds, 60% of BCG’s recently surveyed companies plan to increase their investments in digital and AI in 2023. But many of those surveyed simultaneously expressed concern over the uncertainty of the ROI from digital transformation. During Covid, companies that used advanced digital technologies and AI outperform their counterparts. But the big challenge is for those companies that are trying, but the failing survey revealed that about 70% of digital transformations fail to achieve their objectives.”

https://www.forbes.com/sites/markminevich/2022/12/29/what-are-the-future-disruptive-trends-in-a-volatile-2023/?sh=67c4e9f92bf5

This means that companies that use AI and advanced digital technologies such as Metaverse-based virtual workspaces, quantum computing, green energy sources, robots and satellite connectivity will find themselves in a strong position to leverage the opportunities presented by the changing technological landscape. Generative AI or AI that can learn, synthesize and produce content – is set to take off.

The trend towards a hyper-connected world is driving the development of intelligent drones and other technologies, such as IoT devices. According to Statista, there will be approximately 20 billion IoT devices worldwide in 2023, ballooning to 31 billion by 2025. Companies are investing in sensors, IoT devices and tools that can prepare, analyse and visualize the massive amounts of data collected. This is driving collaborations in healthcare, telecommunications, manufacturing, agriculture and automotive industries.

The Metaverse is also gaining traction, as companies use software to set up virtual workspaces and retail locations. Gartner states that – by 2027 fully virtual workspaces will account for 30% of the investment growth by enterprises in the Metaverse technologies.

Further, the Global Robotics Market is also projected to reach $215 bn by 2030.

All these factors strongly indicate that, sooner or later in FY (2023-24) both these companies stocks will definitely hit their new life time highs, despite either Domestic & Global Inflation & Rising Interest Rate Problem or concerns related to Recession in US & EU.