TATAINVEST Q2 FY25 earnings call.
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Revenue
₹142 Cr
verified against source
Revenue YoY
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reported change
EBITDA
Pending
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Where this quarter sits.
Quarter read
What the record says.
Tata Elxsi reported Q2 FY25 revenue of INR 955.1 crores with 3.1% QoQ growth, as EBITDA margin expanded 70bps to 27.9%. PAT grew 24.6% QoQ to INR 229.4 crores, aided by currency tailwinds and one-time items. Transportation continues to drive performance with 4.4% QoQ CC growth, while Media/Comms (-2.2% QoQ) and Healthcare (-11.2% QoQ) remain under pressure. The company won a landmark $50 million multi-year SDV deal from a European OEM (ramp-up from January), and announced an AI Center of Excellence win with a Middle East operator. India revenues surged 31.2% YoY, while Japan & emerging markets grew 81.9% YoY. Management targets double-digit constant currency growth for H2, though acknowledges the task is "extremely difficult." Healthcare has bottomed per management, with partial recovery expected in Q3. Key risk: global auto OEM cost pressures and decision delays could impact transportation deal closures and ramp timelines.
Colored figures show movement against the previous available record.
Guidance to track
- Management maintains target of double-digit CC growth for full year FY25, acknowledging H2 must be "extremely strong" to achieve this given H1 performance. Guidance to be reassessed at Q3 end.
- Management continues to target margins within the previously communicated band, expecting H2 to be a "better half" aided by fresher hiring push in Q3 and improving revenue trajectory.
- Major SDV deal signed in Q2 will see meaningful revenue contribution starting January 2025, with ramp-up beginning mid-Q3. Deal spans 5 years with global European OEM.
- Healthcare vertical has bottomed in Q2 (per management). Partial restart of delayed programs expected in Q3 with full recovery targeted by Q4 FY25.
Risks flagged
- Multiple global OEMs are cutting EV targets and slowing decision cycles. While Tata Elxsi has closed deals requiring execution, pipeline deals may face extended evaluation periods (deals now taking 6 months vs. 3 months historically).
- CEO described the media vertical as a 'bloodbath' with ongoing budget tightening, consolidations, and cost-focused deals. Green shoots exist (RDK Broadband, AI CoE) but near-term growth visibility remains limited.
- JLR (a major customer) faces its own volume declines and EV strategy recalibrations. While the INR 1,000 crore target is a multi-year aspiration, near-term growth will depend on diversifying to other OEMs faster than JLR headwinds materialize.
- Lateral hiring halted; only specialized/skills-based additions and Q3 fresher batch planned. With utilization at 69.5%, there is headroom, but if healthcare recovery coincides with transportation ramp-up, execution bandwidth could become constrained.
Key quotes
- The media communications is a bloodbath. You know, you look at any company in this area, you look at any competition, you look at overseas companies, everybody is. I mean, all of us have seen this tightening of budgets and huge amount of consolidations happening in this industry.
- Our target is definitely to go after that double-digit growth, and we'll put in all our best to see whether we can reach that. I know it is asking too much and it is tough, but why I'm a little confident is the sort of deals that we are pursuing.
- All we need is one or two large deals every quarter. And I think we are there. We are seeing some of those deals. And even if the industry is going through a lot of turmoil, all we need is those one or two deals that will really help us and keep us afloat.
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