TATAINVEST Q2 FY26 earnings call.
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Revenue
₹154 Cr
verified against source
Revenue YoY
—
reported change
EBITDA
₹193.3 Cr
latest reported figure
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Actual signal trajectory
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What the record says.
Tata Elxsi reported Q2 FY26 operating revenue of INR 918.1 crore with 2.9% QoQ growth in natural currencies, while EBITDA came in at INR 193.3 crore (21.1% margin), up 20bps sequentially. The transportation segment—contributing over 50% of revenues—grew modestly at 0.7% QoQ, impacted by a cybersecurity incident at a major auto client that delayed project starts; management indicated positive CC growth would have been achieved absent this event. Media & Communications delivered a strong 6.8% sequential growth on large deal ramp-ups, while Healthcare declined 2.3% due to regulatory program conclusions. U.S. markets grew 7.9% QoQ, with Europe remaining the largest market. Management expressed strong confidence for H2 FY26, expecting both revenue and margin improvement over H1, with utilization targeting 75% by fiscal year-end. The Bayer Devices radiology partnership and Suzuki cloud simulation center were highlighted as multi-year deal wins. Key risks include media growth moderation as deal ramp-ups normalize, persistent U.S. OEM softness due to EV policy uncertainty, and ongoing cybersecurity recovery timeline for the affected client.
Colored figures show movement against the previous available record.
Guidance to track
- Management expects H2 to be significantly better than H1, with double-digit growth anticipated in both automotive and healthcare verticals for FY27 based on deal pipeline, ramp-ups, and new customer wins.
- Margins expected to improve versus H1 as revenue grows and utilization improves; target is 75% utilization by fiscal year-end which should restore margins to historical trajectory.
- Focus on improving employee utilization from current ~70% to 75% by end of financial year, and further to 80% in FY27 as key to margin recovery.
- Growth will moderate in H2 compared to Q2 as the large deal ramp-up impact normalizes; segment under stress due to M&A activity among customers.
Risks flagged
- A cybersecurity incident at a top automotive client caused project delays from September. While systems are reportedly back to normal with positive customer conversations, the revenue impact may persist partially into Q3 before full normalization.
- Q2's strong 6.8% growth was driven by large deal ramp-ups that will moderate in H2. The segment remains under stress from M&A activity and corporate restructuring among broadcasters and operators, making visibility low.
- U.S. market continues to be muted for core automotive OEM business due to EV incentive withdrawals and emission norm relaxations causing portfolio resets. Legacy OEMs are delaying EV conversion programs, affecting R&D spending.
- Healthcare segment declined 2.3% due to conclusion of regulatory/MDR programs. While management expressed confidence in H2 improvement and FY27 double-digit growth based on Bayer deal and new customer additions, near-term visibility remains limited.
Key quotes
- If you look at our deals that we're chasing, if you look at the funnel, if you look at the pipeline, and also if you look at some of the deals that we have closed and the ramp ups that are happening, I feel that H2 will be definitely much better than H1. I'm very positive on that.
- We got a 90 basis point gain from the favorable currency movement, which is net of the cross currency impact on the cost side. Also, due to the higher salary cost converted into the actual INR reported, the 90 basis point of exchange gain got compensated, offset by the 40 basis point of the higher people cost.
- We are one of the, if you look at from a percentage of revenues that comes from offshoring and so on as compared to all the other competitors, our ratios are far, far higher than anybody else. It goes without doubt that any trend in offshoring, looking at best cost countries and so on, Tata Elxsi is a preferred vendor because of the capability, the experience, the process, know-how, and 30+ years of experience of doing this.
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