Tata Elxsi · Material risks, their source context, and severity in the latest available quarter.
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Risk intelligence
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.
