Informist, Thursday, Jul. 10, 2025

By Anand JC

NEW DELHI – Tata Elxsi Ltd.'s June quarter net profit contracted at the sharpest rate sequentially since the first quarter of the financial year 2019-20 (Apr-Mar). Along with the bottom line, the company's top line contracted for the third consecutive quarter sequentially while missing analysts' estimates on both counts.

The company reported a net profit of INR 1.44 billion for the June quarter, just over 16% lower sequentially. This is also lower than analysts' expectations of a bottom line of INR 1.70 billion.

Revenue from operations for the reporting quarter stood at INR 8.92 billion, compared with INR 9.08 billion for the March quarter, marking a drop of nearly 2%. Analysts had estimated a revenue of INR 9.03 billion.

The company's revenue from software development services, by far the biggest contributor to its top line, was INR 8.72 billion, down 0.6% sequentially. Earnings from its system integration and support services operations fell to INR 196.50 million in the June quarter, down from INR 308.80 million in the March quarter.

The Bengaluru-based technology firm's earnings before interest, taxes, depreciation, and amortisation for the latest quarter was INR 1.87 billion, against INR 2.08 billion recorded in the March quarter. Its EBITDA margin for the June quarter was 20.9%, 200 basis points lower sequentially.

"This quarter was challenging across key markets, with macroeconomic uncertainties, industry- and customer-specific issues impacting R&D spend and decision making cycles across geographies," Tata Elxsi's Chief Executive Officer and Managing Director Manoj Raghavan said in a press release.

Tata Elxsi's transportation business reported 3.7% growth sequentially in actual currency terms for the June quarter, but was flat in constant currency terms. "We are starting to realise the positive impact of large deals won last quarter, including SDV (software-defined vehicles)-related deals with Mercedes-Benz and a European OEM (original equipment manufacturer), and Suzuki a quarter prior," Raghavan said.

The company's media and communication business declined 5.5% sequentially in constant currency terms. "While the overall business environment in this industry continues to be subdued, the drop is largely due to transition investments for the large deals we won last quarter," Raghavan said. He expects the segment to grow from the second quarter onwards due to large deal ramp-ups and a healthy deal pipeline.

Tata Elxsi's healthcare and lifesciences segment fell 6.7% sequentially in the June quarter in constant currency terms. This was because of the impact of tariffs on medical device engineering programmes and spends with two key customers in the US, the company said. It expects a recovery in the second half of the current financial year.

"We expect steady improvement in bottom line and margin through the year even as our two largest businesses, transportation and media & communication, return to growth in Q2 FY26 (Jul-Sept) and beyond, and utilization improves on the back of ready capacity and capability we have invested in over the past few quarters," Raghavan said.

In constant currency terms, Tata Elxsi's June quarter revenue fell 3.9% sequentially. Its EBIT for the reporting quarter was INR 1.62 billion, down 11.2% sequentially. The EBIT margin for the quarter was 18.2%, compared to 20.1% for the March quarter.

The contribution of its business in India fell to 19.8% in the June quarter from 22.4% in the March quarter, Tata Elxsi said in its investor presentation. Europe's contribution increased to 39.5% from 37.9% in the sequentially trailing quarter. Americas' contribution fell a bit to 30.1% in the June quarter from 30.6% in the previous quarter.

Tata Elxsi's headcount stood at 12,127 in the June quarter, compared to 12,414 in the March quarter and 13,142 a year ago. Its attrition rate increased to 15%, the highest since the June quarter last year. The attrition rate in the March quarter had stood at 13.3%.

The company disclosed its earnings after the equity market closed. Its shares ended Thursday's session slightly lower on the National Stock Exchange at INR 6,137.50 apiece. End

Edited by Rajeev Pai

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