Tata Elxsi, one of the world’s leading providers of design-led technology services, has released its Q2 financial results for the fiscal year 2024-25. The company has performed admirably, delivering ₹955.1 crore in operating revenue, a 3.1% increase quarter-on-quarter (QoQ). CEO and Managing Director Manoj Raghavan highlighted that the quarter's Profit After Tax (PAT) grew by 24.6% QoQ to ₹229.4 crore, aided by R&D incentives and tax credits from previous years.

Tata Elxsi’s operating margin also saw an improvement, with the EBITDA margin rising by 70 basis points (bps) to 27.9%. This reflects the company's offshore delivery excellence, focus on operational efficiency, and strategic initiatives across key sectors. One standout achievement for the quarter was the $50 million multi-year deal with a European OEM, which is poised to accelerate Tata Elxsi's growth in the Software Defined Vehicle (SDV) space.

Transportation Segment Leads Growth

Tata Elxsi's transportation business continues to be a major driver of growth, with revenues increasing by 8.8% QoQ. The company's deep expertise in ADAS, Connected Vehicles, Electric Mobility, and Software Defined Vehicles (SDV) is helping it win substantial contracts with global Original Equipment Manufacturers (OEMs). The recent $50 million deal will enable the development of the SDV platform for a world-leading brand, strengthening Tata Elxsi's foothold in the automotive engineering space.

In addition to this, Tata Elxsi announced a strategic partnership with Nidec Corporation, Japan, to support technology initiatives in the automotive market. The company also launched a Next-Gen Mobility Innovation Center in Bengaluru in partnership with Emerson, further emphasizing its commitment to shaping the future of transportation.

Mixed Performance in Other Segments

While the transportation segment performed exceptionally well, the Media & Communication business faced a slight dip, with revenues declining by 1% QoQ. However, Tata Elxsi remains optimistic about this segment, especially with innovations such as the world’s first RDK Broadband implementation for Qualcomm. This solution allows telecom operators to offer high-speed broadband services through 5G networks, creating new avenues for growth.

The Healthcare & Lifesciences vertical reported a 10.4% decline QoQ due to delays in renewing contracts with major clients. However, the addition of new clients, including a global renal care leader and a US-based healthtech AI leader, is expected to drive recovery in this space. Notably, Skanray, a global MedTech R&D company, has chosen Tata Elxsi for its advanced surgical imaging technology development.

Expanding Global Presence

The company’s strategic focus on expanding in Japan, emerging markets, and India is starting to pay dividends. Revenues from India grew by 31.2% YoY, while Japan and other emerging markets saw a massive 81.9% YoY growth. This geographical diversification, coupled with Tata Elxsi’s design-digital capabilities, positions the company to capture more opportunities globally.

Tata Elxsi also launched a robotics innovation lab in Frankfurt, in partnership with Denso Robotics and AATech, aimed at revolutionizing automation across sectors like precision surgery and healthcare.

Looking Ahead

With a strong deal pipeline, Tata Elxsi is poised to continue its momentum into Q3 FY2024-25. The company’s design-digital proposition and large deal wins, particularly in the transportation and technology sectors, are expected to drive sustained growth. Raghavan expressed confidence in the company’s ability to create value for its global customers while maintaining its leadership in key industries.

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