TATAELXSI Q2 FY26 earnings call.
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Revenue
₹918.1 Cr
verification pending
Revenue YoY
—
reported change
EBITDA
₹193.3 Cr
latest reported figure
Source
manual review required
record provenance
Actual signal trajectory
Where this quarter sits.
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What the record says.
Tata Elxsi reported Q2 FY26 operating revenue of ₹918.1 crore with 2.9% YoY growth in actual currencies. EBITDA stood at ₹193.3 crore (21.1% margin), up 20bps sequentially, while PBT was ₹214.7 crore (22.2% margin). Transportation segment (53% of revenue) grew 7% QoQ driven by new OEM SDV programs, though US automotive remained muted due to EV uncertainty and portfolio resets among legacy OEMs. Media & Communications delivered 6.8% sequential growth on large deal ramp-ups, while Healthcare declined 2.3% due to regulatory program completions but management expects recovery. Management flagged a cybersecurity incident at a top automotive client that pushed some September projects to Q3, limiting what would otherwise have been CC-positive growth. Looking ahead, management targets double-digit growth in Transportation and Healthcare in FY27, with H2 expected to be meaningfully better than H1 on improving utilization (targeting 75% by FY26 end). Margin recovery trajectory remains gradual but management is confident of improvement as revenue grows and wage hikes (planned for Q3) are absorbed. A new multi-year deal with Bayer for radiology device co-development was announced, providing stability to the healthcare business.
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Guidance to track
- Management expressed confidence that H2 will deliver meaningfully higher revenue growth compared to H1, with margin recovery as utilization improves to 75% by year-end. Wage hikes planned for Q3 will be absorbed while still showing margin improvement versus H1.
- Management expects both Transportation and Healthcare verticals to deliver double-digit growth in FY27, supported by new deal ramp-ups (Suzuki, Mercedes-Benz, Bayer), expanding customer diversification beyond tier-1 suppliers to OEMs, and strengthening sales and delivery capabilities.
- The company has already improved utilization from ~66% to 70%+ and is focused on reaching 75% by fiscal year-end, which management identifies as the key lever for margin recovery before targeting 80% in FY27.
- The recently announced Suzuki cloud/hardware/simulation center in Tiruvanandapuram and the Bayer radiology technology center are both 5-10 year engagements expected to peak headcount after 6-8 quarters, representing multi-million dollar revenue streams.
Risks flagged
- A cybersecurity incident at a major automotive customer caused delayed project starts in Q2 that were pushed to Q3, preventing what management indicated would have been constant currency positive growth. The customer is now returning to normal operations with positive conversations resuming, but near-term headwind persists into Q3.
- The US automotive OEM business continues to face uncertainty due to relaxed EV emission norms and withdrawal of EV incentives, causing portfolio resets among both legacy and new-age OEMs. This has created a muted outlook for US automotive in the coming quarter, though adjacency businesses (off-road, aerospace/defense) are performing well.
- While M&C delivered strong 6.8% sequential growth this quarter on large deal ramp-ups, management explicitly cautioned that H2 growth will moderate as the benefit from these ramp-ups normalizes. The segment continues to face industry-wide volatility from M&A activity and restructuring among broadcasters and operators.
- Management confirmed wage hikes will be implemented in Q3 for part of the team, adding to the ~40bps people cost pressure already experienced in Q2. Combined with the muted demand environment and gradual utilization improvement, margins face near-term headwinds even as management targets H2 margin recovery versus H1.
Key quotes
- If that incident had not happened, we would have definitely shown a CC positive growth, right? And that that would give you an idea that look that that incident did affect a little bit for us.
- The first focus for us is to get to a 75% utilization by end of this financial year and then next financial year to see how we can touch 80%. And that definitely... once we achieve those numbers, I'm pretty confident that our margins will get back to our earlier trajectory.
- We are definitely seeing a lot more positive conversations and at least people are coming back for discussions. So we were prepared for the worst but I think things are definitely looking much better now.
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