TATAINVEST Q3 FY26 earnings call.

Guidance to track

• Management maintains aspiration for double-digit growth in transportation and healthcare verticals heading into FY2027, contingent on strong Q4 performance momentum and early Q1 results.
• CFO Gaurav Bajaj stated confidence in returning to historical margin levels (mid-to-high 20s) by end of next financial year, supported by continued operating leverage and utilization improvement from current ~75% toward 80-85%.
• Healthcare business has bottomed out in Q3 with management expecting recovery starting Q4 FY26. Media & communications showing positive signs from large deal ramp-ups and pending deal closures expected in Q4.

Risks flagged

• CEO acknowledged that customer decision-making times remain slow, with customers making 'very careful, calculated decisions.' Deal award delays in media/comms and extended ramp-up timelines for anchor customers (still 1-2 quarters away from previous peak run rate) could impact growth acceleration.
• CFO indicated that the balance one-third of employees (senior staff) will receive wage hikes in Q4, with impact estimated at 60-70% of Q3's 110bps impact. Combined with continued hiring caution, this could partially offset operating leverage benefits.
• CEO acknowledged it's 'early days' for the defense/aerospace business. While global opportunities exist, concerns around India defense receivables cycles and the need to 'tweak business model' for domestic defense were noted. Commercial success and profitability conversion timeline unclear.
• CFO noted that while major catch-up provision was taken in Q3, 'rules are still not notified and still not enacted.' Additional adjustments may be required once rules are notified, creating potential for further exceptional items.

Key quotes

• We are still not up to the previous run rate. So still, as you rightly said, we have maybe a quarter or so more catch-up to happen, quarter or two, as you rightly said.
• I think we continue to drive the operating model in terms of how we used to do it in the past. We believe there is still scope and runway to improve our utilization further as we see the demand coming back in the subsequent quarter. Hopefully, I think I cannot comment in the short- to medium-term, but we are very positive that we can go back to the margins that we used to operate at, maybe by the end of the next year.
• What we've also been seeing is that we have seen a lot more automotive customers come into that band, right? Especially because of some of the large deals that we have won and how we have been accelerating, so yes, I think it's a combination of multiple of these large wins that are really accelerating our top five and top 10 customer base.