What hiring slowdown! This Indian IT firm to increase headcount by 50% in a year
Tata Elxsi plans to hire 3,000 to 3,500 freshers and 1,000 to 1,500 laterals for FY23. In contrast, many global companies like Google and Microsoft have signaled their intent to put a lid on hiring.
At a time when some market observers have expressed fears that high inflation and fears of US recession could impact demand for IT services, Tata Elxsi has signalled its intent to increase its headcount by a whopping 50% in just one year. “From all our major customers, we really have not heard any intent to reduce budgets," Chief Executive Officer Manoj Raghavan said in a conference call on Friday. The Bengaluru-based firm could grow its current 10,000 headcount by as much as 50% in the year through March 2023, including new graduates and experienced workers, he said.
Tata Elxsi plans to hire 3,000 to 3,500 freshers and 1,000 to 1,500 laterals for FY23. In contrast, many global companies like Google and Microsoft have signaled their intent to put a lid on hiring.
Tata Elxsi shares have risen a whopping 38% so far this year, hugely outperforming the Nifty IT index, which has suffered a decline.
Analysts say that strong demand for niche design services used in making electric vehicles has helped Tata Elxsi's stock surge by more than a third this year, even as inflation concerns have battered the sector globally.
Chief Executive Officer Manoj Raghavan said that Tata Elxsi’s orders remain robust even as the global economy flashes warning signs. For the quarter ending 30th June 2022, the company reported ₹726 crore of revenue from operations, a growth of 6.5% QoQ and 30.0% YoY. Net profit rose to ₹184.7 crore, growing 15.4% QoQ and 62.9% YoY.
Also, during the quarter, Tata Elxsi crossed the 10,000 employee mark with 771 net additions in the quarter.
The company is expand delivery presence with a new center in Kozhikode.
Growth in Q1 was broad-based and it was led by transportation and medical and healthcare verticals. Management commentary on demand, acceleration in vertical adjacencies and FY23E hiring outlook points to near-term momentum, say analysts.
“We expect a 28% EPS CAGR over FY22-24E and a doubling of EPS in three years (revenue-led), with margins at 32.3% and 31.1% for FY23/24E and RoCE at 40%. Yet, these base case assumptions seem adequately priced in and there’s a low margin of safety at 55x FY24E," said HDFC Securities in a note.
It has a sell rating on the stock, citing high valuations.