We recently spoke with the Chief Financial Officer (CFO) of TELX to get an update on the company's progress in the automotive and structural recovery beyond transportation.
The company is prioritizing its research and development (R&D) budgets to improve cost parameters and fix current vehicle architecture, rather than focusing on new product development initiatives.
TELX is working to optimize its software for efficiency and reduce the time-to-market for new features, which is crucial in staying competitive against Chinese Original Equipment Manufacturers (OEMs). This balance is essential for managing vehicle pricing and cost equations.
Although TELX has not made significant breakthroughs in the Chinese market, it has secured a few engagements with local players. The company's overall deal constructs have not seen any material change in terms of pricing or tenure.
The TELX stock has experienced a significant decline of ~33%/~2% in FY25/YTDFY26, while the Nifty IT index has seen an improvement of 5.3%/5.5% during the same period.
The stock's valuation remains expensive, trading at 35x the expected earnings per share (EPS) for Sep-27. We have assigned a valuation of 36x to Sep-27 EPS.
Due to the stock price correction, we are changing our rating to HOLD (previously REDUCE). Key keywords to watch include automotive sector, structural recovery, Chinese OEMs, vehicle pricing, and cost equations.
Investors should note that the views expressed are those of the investment experts and not of the website or its management. It is essential to consult with certified experts before making any investment decisions.
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